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ASIC bans adviser over ‘layered advice’ strategy

Douglas Cecil Allen, a Tanawha-based adviser, has been barred by ASIC from providing financial services for three years after an investigation of his advice files revealed his use of a “layered advice” strategy.

According to an Australian Securities and Investments Commission (ASIC) statement on Wednesday, the review further found that Mr Allen provided advice that was not suitable for his clients’ interests, and made false or misleading statements, leading to the ban.

Moreover, it was found that, when providing advice to clients, Mr Allen failed to:

  1. Make reasonable enquiries to obtain complete and accurate information when certain aspects of a client’s situation were incomplete or inaccurate;
  2. Reasonably consider a client’s insurance options when recommending a client consolidate their superannuation. Mr Allen did not provide a reasonable assessment of the client’s existing insurance, or consider whether there would be insurance consequences for rolling over the client’s superannuation which may have resulted in them being uninsured for a period; and
  3. Appropriately scope the superannuation advice to include insurance. Such a limited scope resulted in an insufficient assessment of whether the benefits achieved from rolling over a client’s superannuation would outweigh the disadvantages from the loss of the insurance.

Additionally, Mr Allen’s statement of advice documents, provided to clients, contained product comparison tables that were deemed false or misleading by ASIC. Upon comparison of the clients’ superannuation products, Mr Allen understated the potential insurance costs, despite having the knowledge that the insurance premiums would likely increase after providing insurance advice, the corporate regulator said.

The banning order took effect from 15 March 2022.

Mr Allen sought a review of ASIC’s decision by the Administrative Appeals Tribunal on 6 April 2022. The application for review was withdrawn on 6 February 2023.