Melbourne-based advice firm Wealth and Risk Management has been ordered to pay more than $7 million in penalties for “numerous contraventions” of financial services law.
Wealth and Risk Management and its related companies Yes FP and Jeca Holdings have been ordered to pay $7,150,000 in penalties over conduct that resulted in “substantial erosion of the client's superannuation balances”, according to ASIC.
Banned adviser Joshua Fuoco, who served as director for the three businesses, was also ordered to pay an additional $650,000.
In a statement, ASIC said the businesses had offered ‘fast cash’ to clients with poor credit histories, who were required to receive and implement financial advice that recommended switching superannuation and taking out ‘high-end’ insurance policies.
These clients were then charged advice fees that were paid from their super funds, ASIC said, with the businesses also then receiving upfront and trailing insurance commissions that were used to provide a ‘cash rebate’ to the clients.
ASIC deputy commissioner Peter Kell said the businesses’ conduct intentionally violated the law.
"This is a significant outcome in a case where a financial services business has deliberately flouted the law and targeted financially vulnerable consumers,” he said.
The businesses have been restrained from carrying on as a financial services business for 18 years, and permanently banned from offering cash payments connected to the provision of financial advice, or advertising cash rebate agreements or similar arrangements.
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