In December last year, ASIC banned former adviser Julie Hamilton for three years for failing to act in her clients’ best interests.
The corporate regulator found Ms Hamilton had failed to:
- make enquiries into her clients’ financial circumstances when recommending switching their superannuation and insurance;
- consider her clients’ circumstances when providing advice on superannuation and insurance;
- give priority to the interests of her clients when providing advice; and
- disclose fees and charges associated with the implementation of her advice.
But speaking exclusively to ifa, Dover Financial director Terry McMaster said ASIC’s treatment Ms Hamilton couldn’t be more different to that of the big four banks.
He said ASIC “sped to respond” to a complaint from Colonial First State (CFS), who he said had cut off Ms Hamilton and denied her access to its platform.
In addition, Mr McMaster said Ms Hamilton’s client fees stopped the same day and were instead kept by CFS.
“It was just one of a series of nasty CBA moves to harm Julie, enrich the CFS and deter other CBA Group advisers from jumping ship and joining Dover,” he said.
In response, Mr McMaster noted Ms Hamilton’s response, which was to transfer her 15 clients from CFS’s platform to the Macquarie platform.
He then said Ms Hamilton did this to access client information and “competently advise” her clients going forward and not to ensure her ongoing income from those clients, as was apparently the complaint from CFS.
According to Mr McMaster, CFS complained that Ms Hamilton’s conduct was a breach of her best interests’ duty.
Mr McMaster said ASIC immediately referred the matter to delegate Graeme Plath and demanded he ban Ms Hamilton.
Ms Hamilton said the ban “basically destroyed me and my credibility in the eyes of my clients and my peers”.
“I lost my identity, my business, my income, my credibility, my house and almost my sanity. I was truly devastated. All my old clients were abandoned, and I could do nothing about it,” she said.
“I was a mortgage broker as well but unfortunately my aggregator is owned by a big bank and has a policy against anyone who has a banning order, so I lost that licence as well.
“I am a shell of a human being now and have found it difficult finding a way through this. At 63, your options are not great.”
More to come.
worst thing for any adviser to do is have any form of relationship with a large bank ( or licensee owned by a bank) totally one way street – every any and every opportunity they will throw you under a bus – moreover you have very little if any push back when they take your earnings – no complaints mechanism – no way to deal with an issue – just some faceless, vengeful, mpving goal posts.. I can say this with some reliability – I have seen a fair share of dealer groups in mine time – and this style of behaviour is the norm – not the exception. Moreover –I could point you too 1/2 other advisers with similar experiences.. Common denominator – we weren’t big enough to count. Cut em free.
imagine if any other occupation, or industry group was made to work in the same manner as financial advisers. they would be up in arms, with their families in tow, protesting at and any public space making a huge fuss about the conditions.
their representatives would be up in arms about their mistreatment.
we have the two pygmy marmosets (Cebuella pygmaea) in the form of the AFA and FPA representing us*.
AND, advisers continue to keep taking this bull shit. fancy that, what other professional has to go through this shit.
*pygmy marmosets are the smallest monkeys in the world
While I agree partially with you that we should be protesting, while there is still a large number of advisers sitting on trail books and in most cases not doing sweet FA for it, we have no sympathy from the public.
Spot on… Lets clean out the dead wood before we complain about how we are seen by the public.
there is nothing anyone can do. until advisers are regulated by someone else this devastation of lives will continue.
i am worried about the mental well being of my fellow advisers.
mental well-being is a serious issue
was there an alternative to her being banned? was that considered?
NO, seems only thing this regulator does is to ban people. but don’t worry you are about to get your wish 70% of advisers will be gone shortly anyway
Some comments below suggest CBA was within its rights as an employer. But CBA was not her employer. They were her licensee. Her firm was an “authorised representative”.
This is where the whole system of licensees or “dealer groups” is flawed. It’s much more difficult for licensees to exercise effective monitoring and control over independently owned small businesses. And it’s difficult for small business owners to operate in a way that best serves their clients interests when they are hamstrung by institutional controls.
All financial advice practices should be separately licensed. And all advisers should be employees of a licensed practice. Get rid of “dealer group” licensing.
you are right. until what you have stated changes, we will continue to have these issues.
she is 63, was a mortgage broker and financial planner, and she had trouble transferring 15 clients?
she wasn’t any good then and she shouldn’t be a financial planner. how can you lose everything at 63, it should all be in structures beyond the reach of anyone like super, spouse, other structures. and at 63, (or by 45) you should be able to retire, if you are any good at “financial planning”
everyone bags CFS, but think of it from a business perspective, I employ you, you build relationships on my dime, I give you a lifeline and then you want to take those clients from me, that is stealing.
if advisers want to leave their employers then fine, don’t take their employers clients. no one owns the client, if the client finds you (easy to do) and they contact you themselves then take them on.
in any case, who wants a client who has been advised previously. advisers take on crap clients then when they get in trouble blame others
Wow – you should print a copy of this statement/rant for yourself. When you get to 63 (or even 45) take it out of the bottom draw and then look in the mirror. Will you be up to scratch?
Wow, what dangerous vitriol.
While your point about adviser v employers’ clients may have validity (or not, in this case we don’t know), it is a separate issue altogether.
It would be especially concerning if ASIC was being used in this manner, i.e. not to monitor quality of advice, but as a punitive device by institutions to retain client relationships.
This is what you are insinuating.
asic work for the big instos. they are their biggest clients. their salaries are dependent on the funding from the banks
My father told me a long time ago, if someone wishes to leave your employ wish them well and let them go. If the bullying implied in the article is accurate, it is very disturbing.
your father also believed in truth, honesty, dignity, value of human life. this is a bank we are talking about
CFS and other platform providers need to get off their high horse and realise they arent the industry regulator. They are in fact much of the issue with the industry. Give them a best interest duty and watch them fail.
watch them fail? they are failing miserably, already. they cannot even tie their shoe laces. did you watch that turd jack regan. how does a turd like that get paid $3m oh wait, it’s shareholders money so who cares.
This highlights the other big problem with vertical integration. It’s not just about conflicted advice. It’s also about conflicted compliance. Vertically integrated dealer groups tailor compliance to reward/cajole/threaten/punish advisers according to the inhouse product business they generate.
If you try to take existing business away, then compliance becomes a tool of revenge and a warning to others.
completely and totally true. it’s a big joke to the big banks. not to mention the compliance people have no idea what they are doing. they just go off a checklist from somebody
Nailed it.
Well said.
“NAB to address advice issues in $314m payout” (Sub-heading from today’s IFA)
Compensating clients for losses was something Dover never had to worry about. Funny that ASIC cancelled Dover’s AFSL yet its business as usual at the NAB.
we get that, but what now. what can advisers do to proactively protect themselves. other than leaving the industry.
A couple of the ‘crawling nasties’ from ASIC should be forced to publicly explain themselves….
You could start with Peter Kell and Louise Mcaulay.
Terry, can you start a class action against the big banks and asic and we will join it.
hello everyone, just pre-planning here.
what’s a good job to do if i get banned. I am highly skilled, been running my own business for 15 years and profitable. have a masters degree.
i’m probably a bit paranoid, but, i am sure i will get jammed somehow
any suggestion would be appreciated.
McMaster working at McDonalds
Although the article is good, the title is misleading. It implies Dover destroyed Julie Hamilton. This isn’t true. Dover went out on a limb for Julie Hamilton. Unfortunately they were no match for the bullies at ASIC and the CBA/CFS.
Another example of ASIC looking after their mates at the institutions….. If only ASIC had acted with as much decisiveness when compliance breaches were occurring at the banks. Look out!! Here come ASIC with the limp lettuce leaves!!! A pathetic, conflicted response from ASIC.
the old we need to throw an adviser under the bus story. Which files do we give to ASIC… How about this person they no longer work for us.
the other thing to consider is that now this lady is a public charge. she’ll go on some form of pension and all the taxpayers are now on the hook.
how does this help the community, one more burden on top of so many others
it’s not like the other dover advisers are going to find a job, 300 to 350 are probably going to end up on the dole. terry was doing a huge community service giving a life line to these people as they couldn’t afford to pay $20k in licensing fees.
at least they were having a go. what happened to fair go for all
What happened to the good old Aussie Fair Go you ask? Well, haven’t heard about Bill Shorten’s new “Fair Go” plan I heard him talking about last week? ha ha what a joke
I feel for Julie I really do. But she was horribly misled by McMaster and was naive to take his advice. To suggest that clients can be recommended to siwtch investment platofmrs on the assumption that this meets the best interest test so that the the Adviser can continue to service the client is a negligent misinterpretation of the best interest duty. It has nothing to do with putting the client’s best interest s first. If you followed this theory, then Advisers should be able to roll clients out of industry funds in bulk to retail funds because the retail funds are easier to deal with. Absolutely incredible that McMaster would think this meets BID. He is a lwyer and was an RM. Mind boggling
I agree, McMaster mislead her and she should be taking McMaster on at court for the damages.
how ? who is going to fund her conquest ?
mcmaster also throws advisers under the bus. he has also learnt a thing or two from the banks.
he is getting his reward now ain’t he
How can you satisfy the best interests duty if you cannot access the advice platform? How do you advise your client in circumstances like these? The underlying investments did not change. Just the platform.
An adviser who did not recommend the clients change to a new platform would be negligent.
The underlying investments didn’t change? Well, maybe the investments purchased on the new platform were similar to what was previously held. But there was no in-specie transfer from CFS to Macquarie, so at some point the underlying investments were changed as they were sold down to cash. Did that trigger capital gains tax? Would that be in the client’s best interests?
you are correct. most don’t even understand what you are talking about
In fact, I would guess she moved them from CFS Wrap to Mac Wrap so it would have been in-specie transfers and the fees would have been less more than likely. So, none of these client’s lost money and she was banned? What about the hundreds of thousands of Bank Advised clients who have lost money? ASIC is a joke!
You can still access through third party authority if her clients really want her to be their adviser. Clearly, switching clients from one platform to another platform without an SOA would not satisfy best interests.
What’s the point of using a platform if your adviser can’t access it? Stop and think about what is being reported: the platform provider switched off access and then complained when the client accessed the same investments through another platform. A platform is supposed to be there to make admin easier. Hard to do that if your adviser cannot access it. How is having your adviser cut off from information about your money in your best interests?
there is a process involved even then to transfer the clients. irrespective of that what appears to me on face value is that :
a. she did the wrong thing by trying to take her employers clients
b. she was caught out on a technicality
c. the letter of the law caught her and not necessarily the spirit
d. ASIC saw that she was a good example to be made of to deter others
this is why we need a new entity regulating advisers. imagine if they banned every nurse or surgeon for not taking file notes to the extent recommended by the AMA and they got banned for it
Your first point is an incorrect assumption. They were her clients as she ran her own practice through FInancial Wisdom…she was not a salaried employee of the bank
My concern is the all embracing terms being used: “Inappropriate advice” and “Best Interest duty” i have recently discovered (Via an audit) that a difference in premium of $28.00 PA (on a premium in excess of $3500.00 PA) is deemed to be “Inappropriate advice” now the facts are that the client actually specifically “scoped out” a product provider which is where the $28.00 Per annum difference came from. this did not deter the audit team, in spite of evidence supporting this, they still decided that the advice was inappropriate. this is a very dangerous precedent as it means the Auditor is “Judge , jury and executioner”.
Best interest duty can mean many different things, some of which are at odds with each other, how does one explain that price is what you pay, value is what you receive? because in my limited experience price seems to trump quality in this area. This is a very disturbing trend and it needs to be corrected.
it is very scary as this is clearly trivial. they are setting you up mate, see a lawyer read through your exit contract and ammo up so that your lawyers are ready to fire up the minute you leave
otherwise, you will be the next casualty like this sad lady
Whoever has done your audit does not understand the the meaning of best interest duty if this is the case
I never believed the depth of fraud that ASIC and the big banks were willing to engage in until I saw it myself.
I briefly worked in a vertically aligned AFSL where the auditor was marking nearly all advisers in our office as medium risk (orange), and some high risk (red) – no green. In one case, he questioned whether my advice was best interests and that I used jargon to express the client goals – the client was a financial controller, goals were in his own words, and we set him up with a defined benefit pension that covered his expenses for the rest of his life!!! There was no medium to challenge the auditor’s findings, and my direct manager said an orange result was common and not to fret over it.
I was concerned about this (and other practices) and I did not stay there long. I have since moved and work with a large franchisee-based licensee, and there is no issue with my audit results. The compliance here is a lot heavier too (less volume, more detail).
I am inclined to believe that the former employer used audit results to keep planners from moving to other licensees. Within the fund it was no secret they were struggling to hold onto capable planners, and the fund was not keeping up with the volume of services they promised to their client base. Some planners had 300-400 review clients PLUS new business targets. The servicing issue was formally identified by ASIC.
Let’s not be naive – corporations sometimes have ulterior motives that are papered over, and it is easier to blame the individual planner.
of course they have, of course they do. but what now, knowing that. what can we as advisers do proactively so we do not become road kill too?
any suggestions ?
Ask ASIC… oh wait, what they want from you is only “regulatory guidance”.
There is much more to this story, and it wasn’t just ‘overnight’. These things take time and drag on for years before action is taken. It’s sad that she has ‘lost’ her ability to be an adviser, but perhaps if there were no issues with her advice that wouldn’t have been an issue.
You miss the point – CBA did not cancel her AR when with her – CBA only had an issue when CBA’s client are moving to another ASFL. Do you not get it?
Would love to hear the full story. Let us know as you seem to be so knowledgeable on the subject?
History continues to repeat. Large Dealers owned by institutions will always make it difficult, and if they can put you out of business and keep the clients well & good. However, best make sure as an adviser you understand your contractual obligations, cross your t’s & dot the i’s, don’t move clients in panic. any adviser who trusts banks, their dealer groups or their platforms is very naïve.
I suppose it is a case of not knowing the whole picture. what is truth? On the article info, Julie is sorely aggrieved by an extremely heavy approach. Big end of town own ASIC. That was clear from the RC findings. This might be another proof. A regulator that has no ethics in how they destroy people is not a regulator to be proud of.. more one that is likely to be seen as a pariah. Trouble is, how does one change the ethics/culture of a government entity? One that is funded now by the businesses it regulates and has no limits on rewards to staff… more scalps = more $ for bonuses. A sorry state of affairs that shows a lack of moral compass at the highest levels of government/public service(?) and society. by accepting this, we are responsible.
Amazing how quickly ASIC can act when they’re taking on a minnow. All the issues at the Big 5 and barely a whimper. Obviously needed to get some easy targets on the scoreboard to meet the KPI’s…
Look guys there’s always 3 sides to a story, His side, Her side and the truth. There would have been some reason that initially sparked that whole saga and although the outcome was a great injustice I’m sure there’s more than meets the eye. This is the exact reason why I have another business running on the side which provides me with about $50k pa income and it works in the unregulated space so even if I got suspended or the AFS was shut down or all my clients jumped ship over night I would still have something ticking over on the side that is ready to upscale at a moments notice – at least I learned that from this pathertically over-regulated industry.
Unless of course you are forced to repay to all clients several prior years of fees, in which case your savings and your other income are at risk. I totally concur our industry pendulum has swung from the 80’s where supposedly it was rivers of cash inducements, to now being a corrupt regulator intent on socialism over regulating the small guy
you are a smart guy, we should all have a second (or third hustle), we can be banned for no reason at all or certainly on even a minor technicality i’m also doing the same you never know, they might not like my look although i used to be a model in my younger days
Yes, CFS is quick to throw advisers under a bus to protect themselves.
Now they are privatised out of CBA, be interesting how long they think they can last if they (product and platform side) would last if more stories like these occur.
Seen this all before ! A certain bank owned insurer/fund manager perfected that art if you crossed them. Seems they did not like the idea of all those investment fees going out the door. All with ASIC endorsement of course
Who?
Seems to me this is all to do with Best Interests Duty. ASIC are now much harder on the interpretation of this duty than when it was first introduced. You only need to read their recent SMSF report where you pretty much need to demonstrate the client WILL be better off – as if life is that certain.
It would appear moving all clients from CFS to a Macquarie platform failed the test and I can understand that – were there assessments of CGT consequences, replacement product advice etc? The transfer might have been acceptable under the old (appropriate) test.
I have an AFSL and would not permit an adviser to simply transfer clients en masse from one platform to another. Did CFS refuse to change clients to Julie Hamilton under her new licensee – that brings into conflict their role as platform provider/manager with adviser operations.
Without details it’s hard to know everything…..but the obvious Complete different rules from ASIC for the banks advisers v non bank advisers & Dover is criminal behaviour and mass conflict.
Im sorry to hear the personal toll this has taken, I truly am. However, for a fund manager to have concerns over an adviser there must be something to it, particularly for ASIC to uphold a decision to ban.
CFS has an issue with one of the ARs under my AFSL yet they wont tell us anything about it other than they have been red flagged, so how does an AFSL manage the AR and the platform if kept in the dark?
Unfortunately this is the whole point of the story, where the fund manager is owned by the Licensee . The point being that behaviour is NOT the way we might assume or expect.
Must be something to it? Yes. Like: if she and others leave we lose our management fees? Do a quick Google on the banning order and you find this nonsense on ASIC’s website:
[i]The banning of Ms Hamilton is part of ASIC’s Wealth Management Project, which was established in October 2014 to lift the standards of major financial advice providers. The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, Macquarie and AMP). Financial Wisdom Limited is owned by CBA.[/i]
How does responding to a complaint from the bank and then banning someone who has left that bank lift the standard of advice at the bank? More like ASIC’s ‘Management by those who have the Wealth’ project.
you simply cannot do this to people and their lives. this is horrendous. if people think this cannot happen to them they are kidding themselves.
this is exactly the reason why we need another entity who regulates advisers.
this is despicable