Yesterday, the corporate watchdog banned Jason Sean Atkins from providing financial services for three years after an investigation found him to be in breach of the best interests duty.
While ASIC did not go into detail about Mr Atkins’ alleged misdemeanour, explaining simply that his advice to set up an SMSF and access LRBA arrangements was inappropriate, the regulator did make clear that this banning order comes as part of its wealth management project into the six largest financial advice providers.
He is the 34th individual to be banned as part of ASIC’s probe into the largest institutionally-aligned licensees, which was launched following a Senate inquiry into ASIC’s handling of the Commonwealth Financial Planning and Financial Wisdom scandals in 2014.
Mr Atkins himself was an authorised representative of Financial Wisdom from September 2006 to June 2013 when he joined AMP’s ill-fated Genesys Wealth Advisers dealer group.
As first reported by ifa, AMP closed Genesys in November 2014 after a dispute between the licensee and its member firms. Mr Atkins was seemingly one of more than 20 Genesys advisers who accepted an offer by Westpac-owned Magnitude following Genesys’ demise.
Commenting on the latest ‘wealth management project’ victim, AIOFP executive director Peter Johnston said it was evidence the regulator is focusing on the right sector.
“Whilst we don’t like to see advisers of any persuasion banned or clients suffering, we are pleased that ASIC are now having success in the institutional space,” Mr Johnston told ifa.
“For too long the proportion of independently-owned advisers banned relative to our market share was out of kilter. ASIC needs to be congratulated on its performance.”
Commenting on the latest ‘wealth management project’ victim, AIOFP executive director Peter Johnston said it was evidence the regulator is focusing on the right sector.
“Whilst we don’t like to see advisers of any persuasion banned or clients suffering, we are pleased that ASIC are now having success in the institutional space,” Mr Johnston told ifa.
“For too long the proportion of independently-owned advisers banned relative to our market share was out of kilter. ASIC needs to be congratulated on its performance.”
Unless Peter Johnson knows the facts behind each of the bans, Peter’s congratulation of ASIC is uninformed, bewildering and a comment that would seem to qualify as a compliance breach for failing to ‘know your client’ (yet giving advice).
As an ex-AMP adviser and somebody who spent a good part of the last few years knee deep in the mess that some of CBAs poor advisers created, I can personally vouch for two things.
1. Vertical integration is a problem – but it has nothing to do with this case.
2. Many (most) clients are unable able to assess the quality of the advice they are provided.
As long as they are in the black, then they are happy. They have no ability to understand whether the same outcomes could have been achieved in other ways – at less cost, with less disruption or perhaps with less benefit to the adviser.
BID is a nebulous concept – but case law and precedent is the only way we are going to get any clarity. In this particular case, I hope there is more to it than we’re all seeing.
Nb. Be careful what you put your name too; if it’s not your advice don’t document as such!
The ASIC Media Release is very vague as to what the Adviser actually did – a 3 year ban would seem a harsh punishment for one instance where advice fell below the required standard – moreover, on its face, the conduct does not seem to be particularly bad. Over the years, I’ve noticed very wide discrepancies in the penalties imposed by ASIC in circumstances where its media releases add to the uncertainty because they don’t give a clear account of the nature of the conduct at issue and the factors taken into account in deciding upon a penalty.
Perhaps instead of ASIC having their focus, or possibly unwritten KPIs, around legal actions and banning/disqualification orders, if they could focus on improving efficiencies in the industry as well as removing overly onerous compliance and legal jargon that is the norm in advice documents and procedures these days. They do little to protect consumers from the few rogue advisers that are in the industry anyway, and if anything they just make it difficult for both clients and advisers. The reasons for being able to do everything (basically) these days online with a few clicks if doing it yourself, vs having to wade through mountains of paperwork if using an Adviser is ridiculous. When there is less documentation and disclosure for the purchase of a house, or undergoing major surgery than to put $1,000 into a Super Fund then something is dreadfully wrong with the industry. ASIC should be there to protect consumers, promote efficiencies and also promote professionalism – not just rack up the numbers for the number of scalps it can take with penalties sometimes worse than those received by violent criminals. Don’t even get me started on the shameless “throwing under the bus” of countless good Advisers over the years that I’ve seen firsthand – this is done by the banks, IFA licensees and ASIC themselves and is criminal. Save the scalping for those who truly deserve it. Privatise ASIC and remove the public service mentality by placing people with actual real world experience and knowledge in the organisation. There should be no grey areas in rules and regulations, nor 100+ page documents written in legalese that explain what you should or could do – it should be black and white and clear to all.
I know for a fact it was AMP policy that all advice related to LRBA was required to be vetted and signed of for BID! by AMP! Assuming this occurred and clients are happy after reading several comments how can this banning decision be justified? Where is the licensee accountability? Where are the facts ! Disgraceful!
This “statement” seems to be very wishy wahy! If ASIC can ruin a persons 20 year career over what they think is “BID” wouldn’t it be only fair that we get to hear Mr Atkins side? I mean by past comments stating that his clients are 100% happy with his advice, in a better position financially and the folders checked by “anonymous” were in the clients best interest then what is the basis ! It is even more criminal if the licensee signed off for BID and because Mr Atkins left the shelter of the big banks he has been thrown to the lion ! This should be worrying to every single adviser ! Seems that Mr Atkins side of this needs to be told as the ASIC “statement” makes no sense?
Of course the client is happy now. The property bubble is still inflating. But how happy will they be when the property bubble bursts? Any adviser who has recommended a high asset allocation to residential property will become a target for disgruntled investors seeking compensation when the bubble bursts. If a client was encouraged to put the majority of their super into geared residential property, while the majority of their non super assets is also in residential property, that is very likely to be perceived as inappropriate advice once the case gets to FOS or the courts.
Saying “the client requested it” is only a valid defence for unlicensed financial advice providers like accountants and real estate agents. Licensed advisers are legally required to be more professional.
Anon, we deal with a lot of SMSF/LRBA clients and this is definitely an area where clients can and do get into these things without advice, without support and without the neccessary knowledge to all (any?) things by themselves. As a result we see our role in this as a coach to the clients who want to do this themselves but need some guidance to make sure it all comes together properly. It may not be the optimal solution for everyone, but at the end of the day its their money. If they want to make these decisions, that’s their choice. And until ASIC, the Labor Party and their Union Super mates succeed in removing choice from our financial lives, they (individuals) can continue to do what is legal to do.
Just because you perceive it as inappropriate advice doesnt mean that the outcomes will be negative for the client. If their ownership of the property is tied to their investment timeframes, then there is no reason why it isnt an appropriate and sound investment over a 15-20 time horizon. On that metric property ownership and superannuation are perfect aligned. Nobody has any idea what shares, property or bonds will be worth in 5 years, let along 20. You can make assumptions but you are just guessing like everybody else.
Maybe so. But if property values correct 30-40% many clients will quickly forget the 15-20 year time horizon, and the fact it was all their idea which you reluctantly assisted them with. They may even say you should have been more active in preventing them from having 95% of their assets in one very narrow asset class. They will probably say they came to you for professional advice about what was sensible, not just what was legal. Let’s hope the rationale and warnings in your SoA are watertight. And heaven help you if an economic downturn or property correction leads to triggering the personal guarantee tied to their LRBA.
Unfortunately the law dosen’t accept the “it’s there money”” excuse anymore. If you don’t think the strategy or product is in there best interest you’re expected to turn them away.
That’s exactly what Count and the CBA did to me. A dealer group pushing an advisor under the bus to boost their compliance figures. Watch this space as I expose this over the next 6 months. Interesting times ahead for Count and senior management who attempt cover over their own sins.
Feel free to keep us in the loop (off record). Editor@ifa.com.au
I will. Information coming your way. It’s time that the big players stop getting away with absolute lies that ASIC keep believing and acting on without question.
I personally know these clients that Mr Atkins has been banned due to ASIC using the power of “BID”. I can say every single client is in fact extremely satisfied with Mr Atkins, could not be happier with his advice and are forever greatful and provided testimony they are in much better position after receiving advice! Given ASIC believes Mr Atkins did not act in the clients best interest and thus destroyed a 20 year career in the process wouldn’t it be only natural they contact each client face to face given they are the people ASIC keep saying they want to “protect” Who really does determine “BID”, isn’t it all about the client? ASIC has a lot to answer for because if they are deciding advisers have failed “BID” when clients are completely happy and feel they have benefited from advice then the whole financial planning industry and advisers are in serious trouble !
This comment is SO TRUE. How can anyone but the client really determine “BID”? This just shows the overall failure of the laws surrounding our industry if an advisor gets shamed and pushed out while their clients are happy and grateful and are in a much better position due to the advice. Sounds like a potential “denial of natural justice” claim by the advisor to me!
How can anyone but the client really determine BID? Gee I don’t know I can think of others…. perhaps we leave it to the experts that 1) can interpret the law and 2) can actually understand when at times complex strategies and products are recommended. Just because the client is ‘happy’ that does not mean they received appropriate advice.
If something goes wrong say in the medical industry… sure the patient tells their side of the story but they don’t get to determine whether the doctor/surgeon/specialist followed proper protocol or did the right thing. Why? because the patient isn’t the expert. You rely on other professionals in the industry or the governing body.
This is a very serious and worrisome allegation. ASIC needs to respond to this. There must be more to this story. Surely. They have destroyed someone’s career and denied clients access to their adviser whom they are (apparently) very happy with.
Of course there is more to the story. But ASIC just releases a summary and everyone uses it as an opportunity to jump all over it and claim conspiracy theories. I suspect if ASIC released all the facts then all the people whinging that the adviser was hard done by, might shut up.
If the adviser involved wants to respond he can. He can go to the media and tell his side of things. though I suspect he already has in one of the early posts by Anonymous who “personally know these clients”. If the adviser disagrees with the decision then he can appeal. Though if the banning is upheld then what? Then we will see a flood of comments that the AAT is somehow not doing their job either.
I find it bizarre that as people in the industry we don’t welcome the fact that when people that aren’t doing the right thing are banned. Or would you prefer we do away with ASIC completely, and the Corps Act and everyone just do as they please. And it all ends up like Lord of the Flies.
This smacks of George Orwell’s Big Brother – you will be happy when we say it and not before. If what people on here are saying is true, this needs to be taken to an external adjudicator and perhaps 60 minutes with a swathe of clients also backing him up.
Playing devil’s advocate though, on the other hand I also saw a number of Storm clients who were very happy with them and wouldn’t stop what they were doing until it was catastrophically too late…
Perhaps ASIC need to have in place some form of ‘adviser peer review’ process on the advice factor rather than just their own ivory tower aspect.
I hear what you say about loyal Storm clients. There was a firm in Gosfrod that operated under the same model as Storm – gear up the home to max out the equity, throw that into a margin loan and gear that up and maybe even include some internally geared funds in there as well. Nothing wrong with triple gearing is there? Not while the market goes up at least. And they were so expensive $20K plus for the strategy. Plus accounting, tax, insurance, lending all done in-house.
The huge fees billed as first year’s ongoing fee which they would tell the clients to claim it against their tax. Even post GFC they had clients still singing their virtues as it was all going t!ts up. Strange.
Hi Jason. I mean…. Hi anonymous. The happiness or satisfaction of a client is not a good indication of the appropriateness of advice. Just like unhappy and dissatisfied clients make complaints which are rightfully defended since there is nothing wrong with the advice, equally happy or satisfied clients may have received bad advice yet remain happy since they are blissfully unaware that their advice was inappropriate. Most clients would not have the financial literacy or expertise to be able to determine whether the advice was good or not. There are plenty of staff in the industry (advisers, paraplanners, supervisors, support staff) who at times clearly struggle with technical strategies and product knowledge yet you are relying on the everyday mum and dad client to be able to judge whether their advice was good or not?
Yeah and Bernie Maddoffs clients were happy. Until they weren’t.
This industry is in trouble since there are advisers out there giving inappropriate advice and unfortunately the bad apples give everyone a bad name.
Every time there is a story like this sure enough the conspiracy theories come out. It is ridiculous to think that ASIC is banning advisers with no basis.
Do I think ASIC surely have some bigger fish to fry at times? Yes.
Do I think accountants should be looked at? Yes again
But they are applying the law and for those of you that don’t like the legislation then perhaps you should choose another profession since those that do the right thing have nothing to worry about.
(Written by someone that works in the industry and has seen excellent advice, shit advice and everything in between)
CRS – be careful with your assumptions.
And what assumptions do you think I should be careful with?
– The assumption that the client’s interpretation of the advice isn’t a good indication of it’s appropriateness? Well the fact that there are advisers who have received glowing testimonials only to be subsequently dismissed, banned or disappear and on the flip side the number of FOS cases that get dismissed because the client doesn’t have a case, proves that point.
– The assumption that most clients don’t have the financial literacy or expertise to know if advice is good or not? Well if they did surely they wouldn’t need the services of a financial adviser in the first place and/or would have been able to complain themselves yet most get captured in a remediation program and that’s the first they hear about their advice not being up to scratch.
– The assumption that there are people in this industry that struggle with technical and product knowledge? Well if there weren’t there would be no need for any complaint resolutions schemes, need to fix stuff ups, or the massive remediation programs going on all over the place and we could then do away with a hell of a lot of risk, compliance and technical roles in this industry.
– The assumption that ASIC has a basis for banning an adviser? Well of course they do. Just because this online article is scant on details and ASIC’s media release doesn’t contain enough information for anyone else to reach a conclusion (likely because of privacy issues) that doesn’t mean they just picked out an adviser name at random one day and decided they were going to ban him.
I didn’t comment on whether I thought the advice being provided was appropriate or not. How can anyone in this comment section do so? I doubt anyone here unless they are ‘Jason’ has reviewed the files. I merely pointed out that just because a client is happy that doesn’t mean the advice was appropriate. Nor does an unhappy client mean the advice was inappropriate. But Blind Freddy can see that there are serious issues in this industry.
Peter Johnston’s comments and congratulations of ASIC are disappointing. If the independent advice sector was under as much scrutiny as the big institutions then the number of bannings would be even higher. I wonder if his comments will be the same when ASIC comes knocking on the door of AIOFP members and go through their advice and processes in detail and find the outcomes are pretty much the same. Mr Johnston is happy to throw stones but fails to acknowledge the things that started the FOFA rules like Storm, Opes Prime, Westpoint etc. were predominately the domain of his members, not of the other sector of advisers he so happily throws under the bus. ASIC isn’t your friend and hates all advisers equally. It’s about time all advisers stopped sniping and understood there is a role for a variety of advisers in the market.
The adviser misdemeanour was setting up a SMSF to access LRBA arrangements. How does that relate to vertical integration ?
because AMP wants to deflect from the actual dodgy stuff that goes on
So it has nothing to do with vertical integration but just another opportunity to argue that vertical integration is the root of all evil
Most likely AMP got the LRBA loan and also own the SMSF admin.
Probably do their own SMSF deeds, etc
And don’t forget the AMP Life insurances in the SMSF too.
I’d think AMP clipped the vertical ticket many many times ?
The article specifically stated that ASIC did not provide any detail on the misdemeanour.
So your claim that AMP most likely clipped the vertical ticket many times was based on what exactly ? Did he where AMP underpants as well ?
Oh you mean running a commercial organisation large enough to handle various aspects of a person’s affairs? Yes I can see why this is held as the ultimate evil up there with Nazi’s and ISIS… For pity’s sake, gain a modicum of intelligent thought, and stop with the mindless banter that has originated by the ISA and Labor.
If you have to worry about AMP and their advisers I suggest that you don’t have a good business model (and probably should just go sign up with them or the ISA). I have not yet come across a true IFA that’s successful that has any concerns or sees the institution guys as any real competition, whereas they all agree the ISA is intent on shutting our profession down,
Agreed. It does appear that some of our IFA colleagues have a limited value proposition that relies on labelling everyone else the bad guys. Quite pathetic really. The heat will really turn up when they are required to explain their client investment outcomes compared to institutional funds. The elephant in the room is how they manage risk and return and why they are fixated on the investment approach rather than the investment strategy which is the key determinant of investment outcomes.
I agree, I want a strong industry in both the Independant, aligned and employed sectors, I have no concerns competing against anyone but wouldnt’t like to have no competition,
I think everyone is reading into this too much. It is not implying that the issue necessarily had anything to do with vertical integration (though it could well have and don’t think that should come as a surprise) rather ASIC has been looking into the largest institutions which happen to be vertically integrated.
The adviser may have been reviewed as part of those adviser names that were given to asic (per report 515).
If ASIC had of asked the non-institutionally aligned players in the industry or the smaller institutionally aligned players, adviser names still may have been put forward and in all likelihood upon review there may have been further action taken.
The press release from ASIC is pretty slim. Most advisers are left hanging saying “but why”. ..Is this healthy for the industry ? No. ..I’m wondering if it’s also a case of AMP/Bank throwing ex advisers under the bus. A classic way to make the dealer group compliance program look good and a clear message to all advisers in the group… i.e Leave AMP and this is what’s going to happen to you buddy. We”ll go through all 300 of your past files and pass on say five of the deficient ones over to ASIC as samples, when you’ve left. AMP will look good, Mr adviser looks poor. Stay with us and you’ll be ok.
There is nothing truer than this comment. I am sure i could pick apart 20 years worth of an advisers files and find compliance issues. If the client is happy and in a better position, forgetting to tick a couple of boxes over a 20 year career is a non issue. i know of many advisers who would love to change from big licencees but afraid of the potential ramifications from the faceless men who would dissect every file as revenge for losing FUM to a rival group.
Seriously .. if you think this is driven by the big 4 you are a peanut …