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.”
Whilst this guy deserves to be banned and these practices need to be stamped out…..
Apart from the cold calling, is this not an exact copy of the Industry Super sales process?
*get client through marketing channels
*change superannuation and investment with limited information
*dont consider existing insurance arrangements and replaced with inferior products (as happens daily hundreds of times)
*switched clients into poor performing investments without considering their situation or needs
*no need to abide by best interests duty
*no tailored SOA
*self auditing
Seems to me (once again) that he only got in any trouble because he had the job title Financial Adviser. If it was just a school dropout working in a ISN call centre he would have been given the salesman of the month Award from Australian Super.
I think you’ve raised an important issue. These “boiler”” rooms?… of super only advice, are the new training grounds of the future. Traditional avenues of becoming a planner are dying out due to over regulation, Professional years and Banks exiting advice. It’s a really good reason as to why closer scrutiny is required.
So true – vertically aligned, conflicted Industry super funds somehow get the clean bill of health despite all their failings across thousands of new sign-ups a year, and this chump (admittedly he’s dodgy as hell) gets banned but ISA can continue along merrily? Hope Hume & Wilson get their way and drive the Unions & industry funds out of existence.
well done IFA. Finally we get a little more detail in these articles re the reasons why the adviser got banned. Keep it up. short and scant reports achieve nothing other than instill fear into the adviser community. This guy obviously deserved to be banned.
Thanks George for the feedback! From your mouth to ASIC’s ears.
I’m very sad to hear these “chop shops” are still here.
Smart Solutions obviously not so Smart!
Look up the history on the Adviser Register. Some interesting gaps in advising. Don’t know about anyone else, but I wouldn’t be able to take a year or 2 off and get right back into it.
despite the obvious failings here (and good on ASIC for knocking it on the head in a short time frame), it a new issue not heard of before being ‘layered advice’ strategy. Now ive heard it all. KPMG made us do two seperate SOAs, one for SMSF, one for individuals.. suppose we are not contravening some sort of ASIC view.
Good point Bear, ASIC have done well to identify and stop the issue relatively quickly.
Count Financial used to require the same
That’s completely different… I hope you understand why?
The bigger story is the AFS licence of Smart Solutions being cancelled. There must be some worried current and previous Smart Solutions advisers out there.
Numpty.
this group has so many other business names. think they now liked to national super advice.