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.
“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.”
Can someone please explain how this works? I thought we cannot take out money from super. Thank you.
Interesting that a company systemically breaches best interest and churns, only to get a 1 million dollar fine, yet this company runs fee for service and rebates commissions and gets a 7.8 million dolllar fine. Obviously the way they were advertising it (for a loan) was not right and deserved punishment but to say this was 7.8 times worse than what National Sterling did is ridiculous.
Agree with comments by other planners that it gives us a bad name, but…. wondering if any clients actually complained, how many used the cash to get out of a tight spot & were thankful, and really, offering a rebate from commissions/taking an fee from super is it really flaunting the law? Must admit I haven’t read or investigated anything further on this case, and have a personal bias as a hater of the current ASIC regime.
The AFSL system causes this confusion because everyone is either a licensee or an Authorised Representative regardless of their business model. The system is broken, and it’s giving every one in the profession of financial planning a bad name!
Not correct. There are also Representatives and CARs. Moreover, the AFSL is the Licensee, that would be the “L” bit of the acronym. Bad Advisers give the profession a bad name, not the licensing system. Does the drivers licence system create a bad name for drivers?
Hang on, they charged fee for service and rebated commissions! Therefore they must have been providing “conflict free advice”. Were they members of IFAAA?
No mention of banks either
about time ASIC hit up some boutique advisers
Every adviser thinks they are the good guy but I’ve no doubt all have churned in the past to build their businesses
I would recommend that IFA’s writer read the facts giving rise to the claims on this case before writing a story such as this. Doesn’t take long to locate the facts using google. Not all “financial services businesses” are “advice firms”. Indeed this case proves they weren’t financial advisers. Thanks in advance.
Finally. ASIC, congratulations. Job well done. Get this muck out of our profession. Pity, there was no jail time… Bubba was waiting for a new playmate. Again, well done, ASIC.
Isn’t this the rubbish that us good guys have to put up with and then its splashed every where and we are all tainted with the same brush