ASIC has begun court action in the Federal Court against an advice group and one of its former financial advisers.
In a statement, ASIC alleged that RI Advice Group failed to take reasonable steps to ensure that former financial adviser John Doyle provided appropriate advice, acted in clients’ best interests and put his clients’ interests ahead of his own, as required by law.
Mr Doyle was an authorised representative of RI Advice between May 2013 and June 2016. RI Advice was, until its recent acquisition by IOOF, an ANZ-aligned firm.
ASIC also said it is taking action against Mr Doyle, alleging that he gave inappropriate “cookie cutter” advice to retail clients to invest in complex structured financial products called Macquarie Flexi 100 Trust and Instreet Masti 36 and 38, without taking into account their financial goals or risk tolerance.
The impacted clients were, in some cases, preparing for retirement, ASIC said. Further, it alleged that Mr Doyle received upfront and ongoing commissions for each of his clients’ investments in the structured products.
In addition, ASIC alleges RI Advice knew, or should have known, that there was substantial risk Mr Doyle was not complying with his obligations under the law and was repeatedly recommending structured products to his clients, bypassing compliance processes. ASIC also alleges RI Advice did not take reasonable steps in response.
Finally, ASIC also claimed that RI Advice contravened general obligations as an Australian Financial Services Licence holder and is seeking compliance orders from the Federal Court to prevent similar contraventions occurring in the future.
The maximum civil penalty for contraventions alleged against RI Advice is $1 million per contravention. For Mr Doyle, the maximum civil penalty is $200,000 per contravention.
The conduct of both RI Advice and Mr Doyle was examined as a case study on ‘bad advice’ as part of the interim report of the Hayne royal commission.
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