Adviser hits ASIC with compensation claim

A former authorised representative of non-aligned licensee Dover Financial Advisors is filing a compensation claim against ASIC for losses sustained due to unwarranted regulatory intervention.

Ocean Financial Pty Ltd director Peter Francis told ifa he is in the process of applying to the Australian government’s Compensation for Detriment caused by Defective Administration (CDDA) scheme, seeking damages for reputational damage allegedly caused by actions of the corporate regulator.

In 2009, Mr Francis - then an authorised representative of McMasters Group-owned Dover Financial Advisors - entered into legal proceedings against his licensee over a disputed breach report. 

The incident led Mr Francis to believe he was under investigation by ASIC, an assumption that was furthered by the testimony of two “market participants” who claimed they had been approached by the corporate regulator for information about Mr Francis’ business.

Several years later, Mr Francis was informed by ASIC’s NSW Regional Commissioner that he had never been under investigation - but by that time Mr Francis contends the reputational damage had been done.

“All of my clients have been lost as a consequence of ASIC,” Mr Francis told ifa. “I have three years of lost income, and now cannot now be employed in the industry.

“ASIC has put the perception into the financial market that I have done something wrong and to date has not in any way attempted to have it remedied. They do not want to consider the ramifications of their actions."

A letter from the Commonwealth Ombudsman to Mr Francis, dated 2 September 2013 and obtained by ifa, recommended the CDDA scheme may be an appropriate avenue for recourse, while at the same time declining to overturn ASIC’s decision to not issue a ‘no action letter’ clearing Mr Francis of accusations made against him by his former licensee.

As part of the settlement between the two parties, the dealer group reportedly made a monetary payment to Mr Francis of an undisclosed amount, agreed to withdraw its breaches report against Mr Francis and to jointly file an application with Mr Francis for a “no action letter” from ASIC which would clear the authorised representative’s name.

Mr Francis also worked for some time as a markets analyst for a predecessor to ASIC, which he said gives him greater insight into the regulator's failings.

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