ASIC has banned an adviser from Queensland from providing financial services for a period of seven years and has cancelled his financial services licence.
Timothy Shapter was the director and authorised representative of Smart Solutions Group from 7 August 2017 to 12 July 2019, ASIC said in a statement.
Smart Solutions had held its AFS licence since 27 July 2017 before it was effectively cancelled by ASIC from 13 January 2020.
ASIC said its review of a sample of Mr Shapter’s advice files found that he provided advice that was not in his clients’ best interests, was not appropriate to his clients, and that gave priority to generating fees for himself over the financial interests of his clients.
The review found that Mr Shapter provided inappropriate switching advice by recommending that clients switch out of their existing superannuation and insurance products, and into higher fee-paying products.
ASIC said it also found that Mr Shapter also used a ‘layered advice’ strategy, whereby he provided his clients with a superannuation statement of advice first, followed by an insurance statement of advice a few weeks later.
This process was found to be confusing for clients and, in some cases, resulted in lost insurance or policy exclusions. Further, ASIC said Mr Shapter issued multiple statements of advice and provided inappropriate switching advice to generate fees for himself.
“Mr Shapter obtained most of his clients under a referral arrangement with a third party engaged by Smart Solutions. The third-party cold called potential clients and obtained limited details about their financial circumstances and their risk profiles,” ASIC explained.
“Mr Shapter then used this limited information to prepare his advice documents. He usually issued his superannuation statements of advice on the same day that the initial client enquiries were made by the third party.
“Mr Shapter could not have properly enquired about, or considered, his clients’ needs and circumstances, their reasons for wanting advice, or the most suitable options for their circumstances within such a short time frame.”
In addition, ASIC said it cancelled the AFSL of Smart Solutions because the licensee failed to ensure that financial services were provided efficiently, honestly and fairly.
It also found that Smart Solutions also failed to adequately monitor and supervise its authorised representatives, and maintain competence to provide the financial services covered by its licence.
“For example, Smart Solutions permitted some of its authorised representatives to audit their own advice files,” ASIC said.
“It also provided false information in connection with the anti-money laundering customer verification requirements because it allowed its authorised representatives to falsely declare that they had sighted official identity documents.
“AFS licensees must ensure that they have adequate resources and arrangements for monitoring and supervising their representatives. Individual advisers cannot audit their own advice.
“Licensees who allow advisers to obtain their clients under a referral arrangement should ensure that advice provided by those advisers is based on the client’s circumstances and supported by adequate enquiries made by the adviser.”
ASIC has launched civil penalty proceedings against retail industry fund REST, a...
Despite the FASEA code of ethics having come into force over a year ago, no cli...
The RBA has made its latest decision on rates against a backdrop of rising bon...