The Australian housing market is currently in a time of downturn, dropping 4.8% in the last year. In context, that’s the most significant fall since the Global Financial Crisis. While a slip in the market will affect many homeowners to some degree, those who have purchased investment property through a self-managed super fund (SMSF) may be especially at risk.
Mr Wilkins was a mortgage broker and helped clients to arrange finance to purchase properties. ASIC found that on five occasions in June and July 2010, Mr Wilkins submitted loan applications on behalf of clients in which he deliberately overstated their savings by between about $130,000 and $179,000.
Mr Dimitropoulos' banning arises from ASIC's ongoing investigation into a property and self-managed superannuation fund (SMSF) promoting group, which includes the companies formerly called Heritage Financial Solutions Australia Pty Ltd (in liq) (Heritage Financial Solutions) and Sunpac Finance Pty Ltd (Sunpac Finance).
BUILDING companies that work for a developer financed by self-managed superannuation funds have an unhealthy habit of going broke leaving subcontractors unpaid.
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.
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.
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.
ASIC has banned Mr Ronald Malcom Cross, of Figtree, New South Wales, from providing financial services for a period of four years. Mr Cross is the CEO and a director of Park Trent Properties Group Pty Ltd (Park Trent).
On 27 November 2015, further to proceedings issued by ASIC, the Supreme Court of New South Wales found that Park Trent had unlawfully carried on an unlicensed financial services business for over five years by advising clients to purchase investment properties through a self-managed super fund (SMSF).
The Court also permanently restrained Park Trent from providing unlicensed financial product advice to clients regarding SMSFs.
ASIC found that, as the key decision maker of Park Trent, Mr Cross:
- was knowingly involved in Park Trent's contraventions, making all of its major strategic and business decisions and intended to influence clients to purchase properties through SMSFs; and
- that Mr Cross was willing to ignore legal advice and warnings about Park Trent's practices, demonstrating that he is likely to contravene financial services laws.
ASIC Deputy Chairman Peter Kell said, 'ASIC's action against Mr Cross shows that we will not hesitate to exclude property spruikers who provide unlicensed financial services from the industry.'
Mr Cross has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.
ASIC launched legal proceedings in November 2014 against Park Trent who, by the time of the trial in June 2015, had advised over 860 members of the public to establish and switch funds into an SMSF (refer: 14-299MR).
On 15 October 2015, the Supreme Court of NSW found Park Trent had been unlawfully carrying on a financial services business for over five years by providing advice to clients to purchase investment properties through a SMSF (refer: 15-300MR).
On 27 November 2015, the Supreme Court of NSW handed down final orders further to the judgment delivered against Park Trent on 15 October 2015 (refer: 15-358MR).
Park Trent has appealed the decision to the NSW Court of Appeal and the appeal is set down for a final hearing on 11 October 2016.
On 16 August 2016, Mr Cross made an application to the AAT for a review of ASIC's decision.
Editor's note 2:
On 20 September 2016, Deputy President Frost made a direction to adjourn the matter until the determination of the Park Trent appeal.
ASIC has disqualified Pierre Jarjoura of New South Wales from being an approved self-managed superannuation fund (SMSF) auditor. ASIC determined that Mr Jarjoura had breached independence and audit requirements and was not a fit and proper person to be an approved SMSF auditor.
ASIC found that Mr Jarjoura had breached:
- Auditor independence requirements of APES 110 Code of Ethics for Professional Accountants, where he audited a fund of which he was a member and the trustee.
- Requirements of Australian auditing standards to adopt appropriate procedures for properly maintaining audit documentation.
ASIC Commissioner John Price said, ‘SMSF auditors play a fundamental role in promoting confidence in the SMSF sector so it is crucial that they adhere to ethical and professional standards. ASIC will continue to take action where the conduct of SMSF auditors is inadequate.’
SMSF trustees and members can check whether their auditor is registered, or whether a person has been disqualified, by searching ASIC's SMSF auditor register at connectonline.asic.gov.au.
Information about Mr Jarjoura was referred to ASIC by the Australian Taxation Office (ATO) under section 128P of the Superannuation Industry (Supervision) Act 1993 (the SIS Act).
From 1 July 2013, the SIS Act required all auditors of SMSFs to be registered with ASIC. This was to ensure that all SMSF auditors meet the base standards of competency and expertise.
ASIC and the ATO work closely together as co-regulators of SMSF auditors. The ATO monitors SMSF auditor conduct and may refer matters to ASIC for possible action such as disqualification or suspension of their registration.