The Royal Commission is gaining a lot of momentum due to the misconduct by financial advisors around Australia. Our consumer advocate Bernie Ripoll is here to discuss the Royal Commission and what to do in the case that you were charged “fee’s for no service.”
Self-Managed Super Fund (SMSF) investors need to be made aware of a scheme that is being promoted across the country. Investors are being advised to borrow to buy off-the-plan property, misleadingly offering high rewards and promising little to no risk. For many, this has ended in unnecessary financial losses.
ASIC has banned Mr Adrian Chenh and Mr Bill El-Helou from providing financial services for a period of five years each following an ASIC investigation.
ASIC’s investigation found that Mr Chenh and Mr El-Helou provided advice to clients that was in breach of the best interests duty introduced under the Future of Financial Advice (FOFA) reforms.
"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.
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.
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.
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).