Conflict of Interest

ASIC permanently bans former Perth insurance broker

ASIC permanently bans former Perth insurance broker

ASIC has permanently banned Perth insurance broker, Mr Antonino Gucciardi, from the financial services industry for misleading, deceptive and dishonest conduct.

ASIC permanently bans Gold Coast financial adviser Mr Satvir Singh Birk

ASIC permanently bans Gold Coast financial adviser Mr Satvir Singh Birk

ASIC has permanently banned Gold Coast based financial adviser Mr Satvir Singh Birk from providing financial services.

ASIC permanently bans former Morgan Stanley Wealth Management financial adviser, Andrew Peter Panayiotides, from providing financial services

Conflict of interest

"Asic has permanently banned Andrew Peter Panayiotides from providing financial services."

ASIC has permanently banned Andrew Peter Panayiotides from providing financial services.

ASIC found that Mr Panayiotides failed to act in the best interests of clients and provided advice to clients of Morgan Stanley Wealth Management in relation to exchange traded options (ETOs) that was inappropriate when considering the financial circumstances and objectives of the clients involved.

Mr Panayiotides' conduct resulted in each of the client's superannuation accounts being significantly exposed to short cash covered ETO positions that were contrary to the risk profile declarations provided by the clients.

ASIC also found that Mr Panayiotides knew, or ought reasonably to have known, that there was a conflict of interest between the financial benefit Mr Panayiotides received, in the form of brokerage, from the numerous ETO transactions he advised clients to enter into and his clients' best interests, and that he failed to give priority to his clients' interests.   

ASIC further found that Mr Panayiotides:

  • improperly made payments into clients' bank accounts using his own funds;
  • issued a false invoice;
  • provided unethical advice to a client in relation to a superannuation fund withdrawal; and
  • entered into a personal loan arrangement with a client in return for offering reduced brokerage while at another firm.

In considering Mr Panayiotides' conduct, which was not of an isolated nature, was not inadvertent and occurred over a long period of time in which clients incurred significant losses, ASIC had reason to believe that Mr Panayiotides was likely to contravene a financial services law in the future and was not of good fame or character. 

ASIC Commissioner Cathie Armour said, 'Financial advisers are expected to act in the best interests of clients. ASIC will ensure appropriate enforcement action is taken against advisers who fail in this duty.'

Mr Panayiotides has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Background

ETOs are a type of derivative that are considered high risk investments.  A call option is the option to buy the underlying shares whereas a put option is the option to sell the underlying shares. Selling options to open a position is a high risk strategy in which the potential for losses is unlimited in the case of a sold call. 

Mr Panayiotides was employed by Morgan Stanley Wealth Management between January 2013 and May 2015.

16-433MR ASIC bans former ANZ Financial Planning adviser from financial services

ASIC has banned Mr Andrew TambyRajah, a former employee of ANZ Financial Planning, from providing financial services for a period of five years.

Mr TambyRajah, of Sydney, New South Wales was a financial planner with ANZ Financial Planning at Hurstville between 19 January 2006 and 30 July 2014.

Mr TambyRajah was banned from providing financial services as ASIC found that he engaged in misleading and deceptive conduct by creating false documents and falsely amending documents contained on client files. The conduct included:

  • writing clients' names and initials on documents in the places designated for their signatures and initials;
  • changing the dates recorded on a number of documents; and
  • creating false investor profile forms for two clients by photocopying forms they had signed in previous years and changing the dates on the copied documents.

Deputy Chairman, Peter Kell said, 'Financial advisers are important gatekeepers who must act honestly to increase broader public confidence in the financial services industry.

'This banning should serve as a deterrent to any financial adviser tempted to act dishonestly.'

Mr TambyRajah has the right to seek a review of ASIC’s decision to the Administrative Appeals Tribunal.

Background

ASIC's work in the Wealth Management Project covers a number of areas including:

  1. Working with the largest financial advice firms to address the identification and remediation of non-compliant advice; and
  2. Seeking regulatory outcomes, when appropriate, against licensees and advisers.

As part of its Wealth Management Project, ASIC has banned the following advisers from the financial services industry, in addition to Mr TambyRajah:

16-429MR ASIC bans life insurance financial adviser for seven years

ASIC has banned life insurance financial adviser Mr Mateen Mohammed, of Calamvale, Queensland, from providing financial services for seven years.

ASIC’s action against Mr Mohammed, a former authorised representative of Synchronised Business Services Pty Ltd, is part of ongoing enforcement and regulatory action following ASIC’s review of life insurance advice.

As a result of ASIC's surveillance, it was found that Mr Mohammed:

  • had not maintained the high standards expected of a provider of financial services;
  • did not understand the duties and obligations imposed on a provider of financial services; and
  • could not be relied upon to discharge the duties and obligations imposed on a provider of financial services.

In particular, it was found that Mr Mohammed did not act in the best interests of his clients in that he failed to:

  • make reasonable enquires into clients' relevant objectives, financial situation and needs;
  • conduct a reasonable investigation into financial products that might achieve the objectives of the clients, including their existing superannuation and insurance products; and
  • prioritise the interests of his clients over his own.

ASIC also found that he had submitted an insurance application without his client's knowledge and as a result had misled or deceived the insurer as to his authority to do so.

ASIC Deputy Chairman Peter Kell said, 'Any advice to switch existing life insurance and superannuation products must be in the client's best interest. Where there is nothing in the client’s relevant circumstances to indicate that the switch would be beneficial, ASIC will conclude that the client is not in a better position.'  

Mr Mohammed was an authorised representative of Synchronised Business Services Pty Ltd during the relevant period, from 1 July 2010 to 22 April 2015.

Mr Mohammed has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Background

Outcomes following ASIC’s review of life insurance advice include:

  • in May 2016, ASIC accepted an enforceable undertaking from Michael Melamed, a former authorised representative of Synchronised Business Service Pty Ltd (refer:16-147MR)
  • in February 2016, ASIC permanently banned life insurance financial adviser Andrew Moroney (refer: 16-036MR)
  • in January 2016, ASIC accepted an enforceable undertaking from Clearview Financial Advice Pty Ltd representative, Jason Churchill (refer:16-008MR);
  • in September 2015, ASIC banned life insurance financial adviser and former authorised representative Lukas Zelka of Neo Financial Solutions Pty Ltd from providing financial services for three years (refer: 15-269MR);
  • in July 2015, ASIC banned life insurance financial adviser Brian Farber from providing financial services for four years (refer: 15-178MR);
  • in January 2015, ASIC imposed conditions on the Australian financial services (AFS) licence of Suncorp-owned Guardian Advice (refer: 15-003MR).

16-135MR South Australian director charged with misappropriating $1.8 million in SMSF property investments

Following an ASIC investigation, Mr George John Nowak has appeared in the Adelaide Magistrates Court charged with thirty one counts of deception and one count of dishonest dealings with documents.

ASIC investigated Mr Nowak's conduct in dealing with members of self-managed superannuation funds (SMSFs) who were undertaking property purchases offered by companies of which he was a director, including EJ Property Developments Pty Ltd. It is alleged that Mr Nowak misappropriated $1.8 million in SMSF monies by not holding funds in a designated account and by not applying those funds towards the intended property purchase.

Mr Nowak was not required to enter a plea and was granted conditional bail. The matter is listed for return at the Adelaide Magistrates Court on 12 July 2016. 

The Commonwealth Director of Public Prosecutions is prosecuting these matters.

Background

The charges of deception contrary to section 139(b) of the SA Criminal Law Consolidation Act 1935 each carry a maximum penalty of ten years imprisonment.

The charge of dishonest dealings with documents contrary to section 140 of the SA Criminal Law Consolidation Act 1935 carries a maximum penalty of ten years imprisonment.

Previous media releases in relation to this matter incude 14-024MR and 15-048MR.

In 2012 in response to the growth in SMSFs, ASIC established the SMSF Taskforce. The Taskforce continues to meet regularly to examine high-risk and emerging SMSF issues such as property spruiking to SMSFs, unlicensed conduct and false and misleading advertising of SMSFs. 

Outcomes and actions stemming from the SMSF Taskforce include:

  • ASIC accepted an enforceable undertaking (EU) from CMH Financial Group Pty Ltd and the sole director, Daniel White, after an ASIC surveillance found CMH had failed to provide advice about self-managed superannuation funds that was appropriate and in the best interests of clients (refer 16-097MR);
  • Ms Sarah Jane Busteed was charged with three counts of dishonestly obtaining a financial advantage by deception and one count of dealing with over $100,000 that was the proceeds of crime (refer: 16-040MR);
  • Superannuation Warehouse Australia Pty Ltd was ordered to pay a penalty of $25,000 for false and misleading“Free SMSF Setup” advertising (refer: 15-332MR).
  • The Supreme Court of NSW found Park Trent Properties Group Pty Ltd had been unlawfully carrying on a financial services business for over 5 years by providing advice to clients to purchase investment properties through a SMSF (refer: 15-300MR).
  • Dixon Advisory Group Limited complied with two ASIC infringement notices, paying two $10,200 penalties after including potentially misleading claims on its website (refer: 15-207MR).
  • The credit licence of Queensland-based Smithson & Baye was cancelled following an investigation into a property and SMSF promoting group (refer: 15-228MR)
  • ASIC released two information sheets to improve the quality of advice provided by advisers onSMSFs: Information Sheet 205 Advice on self-managed superannuation funds: Disclosure of risks(INFO 205) and Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs (INFO 206) (refer 15-192MR).
  • Omniwealth Services paid a $10,200 penalty for potentially misleading claims on its website (refer: 15-190MR).
  • The principal of Sherwin Financial Planners, Bradley Thomas Sherwin, was charged with fraud. The charges relate to the use of SMSFs of former clients of Sherwin Financial Planners (refer: 15-158MR).
  • The Federal Court of Australia ruled that Craig Gore and several other parties and financial services businesses, including Queensland-based ActiveSuper and Royale Capital, contravened sections of the Corporations Act or were knowingly concerned in those contraventions. (refer: 15-134MR)
  • Australian Financial Planning Solutions Pty Ltd paid $10,200 in penalties for potentially misleading SMSF ads (refer: 15-052MR).
  • ASIC banned the founder of the Charterhill Group of Companies, George Nowak, from providing financial services until 3 July 2017 on the basis that Mr Nowak is an undischarged bankrupt (refer: 15-048MR).
  • Interprac Financial Planning agreed to address ASIC concerns relating to advice provided to some clients about SMSFs (refer: 14-258MR).
  • Sentry Financial Services agreed to address ASIC concerns about SMSF advice provided to clients (refer: 14-109MR).
  • SuperHelp Australia paid a $10,200 penalty after making potentially misleading statements about the cost of setting up SMSF (refer: 14-051MR).
  • Media Super paid $10,200 in penalties for potentially misleading SMSF ads (refer: 14-001MR).
  • Spring Financial Group entered into an enforceable undertaking following ASIC concerns about the level of monitoring and supervision of its representatives (refer: 13-263MR).
  • Anne Street Partners agreed to engage an independent expert following ASIC concerns about SMSF advice provided to clients (refer: 13-248MR).
  • We published Report 337 Improving the quality of advice given to SMSF investors. (refer: 13-081MR).

SMSFs will continue to be a focus in ASICs enforcement work.

Editor's note 1:

On 12 July 2016, declarations were filed at the Adelaide Magistrates Court. The matter was listed for return on 22 September 2016 in the Adelaide Magistrates Court for Mr Nowak to enter a plea.

Editor's note 2:

On 22 September 2016, the matter was adjourned until 13 October 2016.

Editor's note 3:

On 13 October 2016, the matter was adjourned until 10 November 2016.

Editor's note 4:

The matter has been further adjourned until 19 January 2017.

16-392MR ASIC bans former Sentinel Private Wealth adviser for five years

ASIC has banned Stephen Michael Beckton, a financial adviser and former authorised representative of Sentinel Private Wealth Pty Ltd (Sentinel), from providing financial services for five years.

ASIC found Mr Beckton did not comply with financial services laws on a number of occasions.

An ASIC review of Mr Beckton's advice found that he had recommended clients change superannuation and insurance products in circumstances where there was little benefit, but significant cost, to the client in changing. This advice benefited Mr Beckton through increased adviser fees and commissions he received from insurers. In doing so, Mr Beckton:

  • failed to act in the best interests of his clients, by:
    • failing to conduct a reasonable investigation of their existing superannuation and insurance products; and
    • giving them advice that may have left them in a worse position than if they had not followed his advice;
  • failed to provide appropriate advice to his clients;
  • failed to accurately disclose the fees associated with his advice; and
  • failed to put the interests of his clients ahead of his own, when he knew that there was a conflict of interest.

ASIC Deputy Chair Peter Kell said, 'Financial advisers must put their clients' interests ahead of their own. Super switching that provides little benefit to the client but is very profitable to advisers is clearly unacceptable.'

Mr Beckton's banning will be recorded on ASIC's register of financial advisers.

Mr Beckton has a right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Background

Mr Beckton was a representative of Sentinel from September 2013 to October 2016.

ASIC published Information Sheet 182 (INFO 182) in August 2013. INFO 182 provides information and compliance tips for financial advisers who provide super switching advice.