The proceedings are against RM Capital and its authorised representative the SMSF Club, ASIC said in a statement.
ASIC contended that SMSF Club and RM Capital contravened the Corporations Act on as many as 259 occasions each, with each contravention attracting a potential civil penalty of up to $1 million. It is the first case concerning the alleged breach of conflicted remuneration provisions.
ASIC alleged that SMSF Club advised its clients to set up self-managed superannuation funds (SMSF), then use their SMSFs to buy real property marketed by a real estate agent, Positive RealEstate.
It also said that SMSF Club had referral agreements with Positive RealEstate and that RM Capital was aware of this referral agreement.
Further, ASIC alleged that SMSF Club accepted more than $730,000 in conflicted remuneration from Positive RealEstate.
ASIC said its case is that the payments could reasonably be expected to have influenced financial product advice given by SMSF Club to its clients, and so constituted banned conflicted remuneration under the Corporations Act.
It also alleged that RM Capital was aware of the payments and did not take reasonable steps to stop the SMSF Club from accepting them and that, as the authorising licensee for the SMSF Club, RM Capital’s failure to take reasonable steps to ensure SMSF Club’s compliance also breached the law.
“ASIC contends that, from December 2013 to July 2016, each time an SMSF Club client used their SMSF to buy a property marketed by Positive RealEstate, Positive RealEstate paid around $5,000 to SMSF Club,” it said.
“At times, Positive RealEstate paid these amounts directly to SMSF Club, while at others it paid them to RM Capital who passed on the majority to SMSF Club.”
ASIC said it is seeking declarations of contravention, civil penalties and compliance orders against both RM Capital and SMSF Club.
i used to work at this shonk shop, trust me asic only found the tip of the iceberg. Should examine their IPOS closely
tip of the iceberg??? I just joined PRE… please let me know what you mean
I know of an AFSL holder who not only accepts referral fees (for off plan property sales) but expects them. They even have a referral marketing agreement set up for the purpose of charging/invoicing for it!
[quote=Yallambeer]How about politicians accepting “donations” from unions, overseas interests and developers. Not conflicted? And when the phamacist pushes placebo vitamins or a host of other garbage forward and gets a tidy profit from it – thats not conflicted either? Yes this SMSF bunch are bad examples of financial advice. Take action by all means. But acknowledge for a second the massive raft of evil conflicts that exist in every aspect of life we face every day. [/quote]
I hear what you are saying this group deserves what they get, their side kick Sequoa is just as bad. I have seen first hand and fixed some other due the destruction that these guys cause by flogging crap properties in expensive to set up SMSF’s after the client pays Positive Real Estate a life time mentoring membership if about $10k+.
This is a win for the Financial Planning industry and is a step towards professionalism once these crooks are gone.
How about politicians accepting “donations” from unions, overseas interests and developers. Not conflicted? And when the phamacist pushes placebo vitamins or a host of other garbage forward and gets a tidy profit from it – thats not conflicted either? Yes this SMSF bunch are bad examples of financial advice. Take action by all means. But acknowledge for a second the massive raft of evil conflicts that exist in every aspect of life we face every day.
Before you throw the first stone please look in the mirror and start with you and your licensee. Just remember that the work around for Conflicted Remuneration since 2013 is large product manufacturing AFSL’s giving their advisers a significant discount on dealer group fees….or software…or marketing…cheap and or fully serviced website…I say if your licensee is a making products it’s .same same.
[quote=Anonymous]In the medical and health industries, referral fees are not allowed. Enough to get one de-registered. [/quote][quote=Anonymous]In the medical and health industries, referral fees are not allowed. Enough to get one de-registered. [/quote] doctors and nurses take huge kickbacks from Pharmas!
I love the words conflicted remuneration. It applies to these con artists but somehow the conflicted remuneration by way of GST and Stamp Duty is okay.. I guess its because this is a tax and revenue in this case based on the value of an asset sold is somehow not conflicted…..give me a break. Fact of life is that regulators allowed this nonsense to continue, knew damn well of its existence and rather than shut the gate at the start, now try to flex a bit of muscle to demonstrate how good they are as regulators. Idiots. Just incompetant idiots. By all means hang these con artists out to dry but hey Government…pony up to your incompetance also. The people that matter most have been let down time and time again. The consumer.
I can’t believe there are people like Stewart are actually cheering that someone might lose their business, that’s disgraceful! I own two investment properties and have done very well out of them, and guess what, there were people who got paid for me buying those properties, shame on them!! I seem remember a lot of advisers were recommending structured products (mainly from big ASX listed financial institutions) such as equities, bonds, trees, grapes, goats pre-GFC and were being paid up to 10% for doing so and receiving a trail as well. This was just as conflicted as someone receiving a referral fee for recommending a property, so I assume ASIC are investigating these institutions as well?
Undisclosed triangular integration.
The banks fund ASIC. Not disclosed by ASIC.
The banks own/fund the AFSLs. Not disclosed by the banks.
ASIC regulates the AFSLs.
Don’t hold your breath waiting for an undisclosed commission case involving a bank.
Don’t hold your breath waiting for a Royal Commission recommendation effecting a bank to be implemented.
Referral fees seem a bit light on. I’ve had people offer me $20k per property, which I’ve refused to be clear. I also find it interesting that the people paying the fees and profiting the most from the property sales (ie) Positive Real Estate seem to have been left out of any action which I assume is linked to them not being licensed and why it makes sense to be a financial coach / unlicensed accountant in the future.
Has anyone ever googled Justin Beeton? (From SMSF Club)….go look for yourself. Leopards don’t change spots.
[quote=anono]The important part missing from this whole train of ASIC logic is how many client complaints were there or did they buy decent properties? Assuming to the regulator they really don’t care[/quote]
There would be plenty who should complain in this group but very few do. Most of the properties were over priced at the top of the market, Sydney, Melbourne and yes predominantly the QLD house & land package
In the medical and health industries, referral fees are not allowed. Enough to get one de-registered.
Add this to the alleged client issues Evans Dixon are having due to their use of in-house funds (see AFR for detail)
Long overdue however it could easily be proved that all the big bank owned licensees did the same thing. I have never understood why the Maurice Blackburn and Slater Gordon lawyers never went after these guys for ‘double and triple dipping’. Equally puzzling is that the regulator and the RBC has allowed the ‘integrated’ model to continue ?! Isn’t this a legal pass to the inevitable conflicted remuneration that will result from such ‘integrated models’ ?
Oh dear what could the matter be, conflicted services stuck in a lavatory, their business crushed they’ll face a big penalty, and they’ll all be flushed… away!
Industry Superfund’s ASIC??? No conflicted remuneration here!!
My prediction- nothing will happen with and too Industry Superfunds……
The important part missing from this whole train of ASIC logic is how many client complaints were there or did they buy decent properties? Assuming to the regulator they really don’t care
and shockwaves were felt throughout the industry as most Licensee holders questioned all their referral partner agreements as well as managed account structures….. what a time for the legal profession