The Administrative Appeals Tribunal has upheld ASIC’s decision to ban a former Westpac financial planner who was found to have not acted in the best interests of his clients over an SMSF property investment strategy.
Former Perth financial adviser Jason Sean Atkins will be banned from providing financial services for three years after he was found to have provided advice to clients to establish a self-managed superannuation fund (SMSF) and use limited recourse borrowing arrangements to fund the purchase of real property.
ASIC found that Mr Atkins had not acted in the best interest of his clients when giving this advice. ASIC was concerned that Mr Atkins did not investigate or consider whether the strategy of investing in property through an SMSF would outperform his clients’ existing superannuation fund and improve their retirement position.
"The detriment and potential loss caused to the clients is potentially very serious. The applicant facilitated a high-risk investment strategy for the clients whereby all of the clients were in a worse financial position than if they had done nothing and not followed his advice,” ATT senior member Dr Michelle Evans said.
“The clients were also left in the disadvantageous position of having a single property as the sole asset in their superannuation funds, leaving them in a precarious position, for instance: if the market were to drop; if the property were to be un-tenanted; or if the clients otherwise have cash flow problems, such as in the case of a redundancy.”
ASIC deputy chairman Peter Kell said advisers who provide poor advice on SMSFs are putting their clients’ financial futures at risk.
“Advisers who fail to give compliant advice will be removed from the industry,” he warned.
“This banning should serve to remind financial advisers that compliance with the best interest duty requires them to use their expertise to conduct a reasonable investigation into the financial products that may put the client in a better position, even where a client approaches an adviser indicating they are interested in a particular strategy or financial product.”
ASIC considered that Mr Atkins should have investigated and considered whether the preferred retirement savings strategy initially suggested by his clients (that is, to invest in property through a SMSF) would improve the clients’ ability to meet their retirement goals.
According to ASIC, this consideration by the adviser would allow the client to make an informed decision about whether they wanted to proceed with their preferred retirement savings strategy.
“The job of financial advisers is to help their clients by providing professional advice that leaves their clients in a better position, not to merely execute their clients’ wishes, especially when those wishes are going to leave their clients in a worse financial position,” Mr Kell said.
Mr Atkins was an authorised representative of Magnitude Group Pty Ltd, a subsidiary of Westpac Banking Corporation, from 11 May 2015 to 11 December 2015.
He was appointed by a corporate authorised representative of Magnitude called Wealth Plus Solutions Pty Ltd. Prior to this Mr Atkins was an authorised representative of Genesys Wealth Advisers Limited, a subsidiary of AMP Limited, from 14 June 2013 to 8 May 2015.
The banning of Mr Atkins is part of ASIC's Wealth Management Project, which was established in October 2014 to lift the standards of major financial advice providers.
The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, Macquarie and AMP).
The company is looking to expand its services for financial advisers.
The FPA has developed a new SOA video toolkit to guide members.
“All advice should be regulated in a similar way”, a financial services firm has argued in its QAR submission.
Get the latest news! Subscribe to the ifa bulletin
Get notifications in real time and stay up to date with content that matters to you.