ASIC starts investigating hundreds of SMSFs

The corporate regulator has launched a major investigation into hundreds of funds in a bid to uncover unlicensed SMSF advice.

As reported by ifa sister publication SMSF Adviser earlier this year, ASIC is currently conducting a major shadow shopping exercise, and has now started contacting various SMSF professionals to collate data on the set-up process of hundreds of funds, as part of a massive research project set for release later this year.

In emails seen by SMSF Adviser, it is clear ASIC has selected several hundred funds that were set up in September 2016 for random investigation, and is contacting tax agents associated with the funds.

ASIC is asking if the clients of the tax agents received any professional advice about establishing their SMSF and, if so, that the contact details are passed on.

While ASIC is gathering details about both financial advisers and accountants as part of this project, it is understood that broadly, unlicensed accountants in particular are on the regulatory radar.

The information supplied to ASIC is treated as anonymous, but the general findings will be published in a report slated for the second half of this year, an ASIC spokesperson told SMSF Adviser.

ASIC could not outline any further details of the investigation, except to confirm that it is pursuing its “major” shadow shop as announced in February, and will be looking at random samples of SMSF advice.

Despite being relatively lax in the past to instances of accountants operating outside of the accountants’ exemption in particular, BDO’s national leader for superannuation Shirley Schaefer suggested ASIC will be taking no prisoners this time around.

“I suspect a lot of accountants have sat outside the accountants’ exemption for years, and ASIC never did anything about it in the past,” Ms Schaefer told SMSF Adviser.

She acknowledged that many accountants do not agree that the SMSF services they are providing fall into the financial advice category, an argument that is largely irrelevant in 2017.

“This is not just tax advice. I certainly believe [SMSFs are] a structure not a product, but that argument is gone. There’s no point having that one again. We’ve been there and it’s gone,” Ms Schaefer said.

Article from: Independent Financial Advisor 

KATARINA TAURIAN- Wednesday, 29 March 2017

Call to remove 'bad apples' from the financial planning industry

Ten years on from when the regulator first called for the removal of bad apples from the financial planning industry, there's been not enough progress. 

Read more from the Sydney Mornigng Herald here.

ASIC bans Financial Adviser, Mr Darren Tindall for five years

ASIC has banned financial adviser, Mr Darren Tindall, of Orange, NSW, from providing financial services for five years after an investigation found he failed to comply with financial services laws.　

Mr Tindall was an authorised representative of Roan Financial Group Pty Ltd between 9 May 2013 and 19 May 2014, and was based in Orange, NSW.　

Mr Tindall was banned from providing financial services after ASIC found that he had:　

• engaged in misleading and deceptive conduct on a client's behalf by failing to disclose their pre-existing medical conditions on an insurance application submitted to an insurer;　
• engaged in dishonest conduct by not disclosing the medical conditions in transferring that insurance obtained to a new insurer; and 　
• recklessly made misleading comparisons about superannuation products to four clients, which induced those clients to switch their superannuation.　

ASIC Deputy Chair Peter Kell said, 'ASIC will take action against financial advisers who have been dishonest or who mislead their clients, in order to increase public confidence in the financial services industry.'　

On 17 January 2017, Mr Tindall applied to the Administrative Appeals Tribunal (AAT) for a stay of the banning and review of ASIC's decision. The stay application was heard on 27 January 2017. On 9 February 2017, the AAT refused the stay. The date for the hearing of review of ASIC's decision is yet to be set.

Former Westpac Home Finance Manager sentenced to 3 years imprisonment after pleading guilty to dishonest use of his position

Following an ASIC investigation, Mr. David St Pierre, a former Westpac Home Finance Manager, has been sentenced in the Southport District Court to 3 years imprisonment, to be released after 6 months on a recognisance order.

On 2 November 2016, Mr St Pierre pleaded guilty to three counts of dishonest use of his position, with the intention of directly or indirectly gaining an advantage for himself or others.

ASIC alleged that between July 2008 and June 2010, Mr St Pierre dishonestly used his position and submitted loan applications for approval when he knew they contained false information and false documents. 

Mr St Pierre obtained over $2.5 million for Westpac customers, that they invested with a now failed Tasmanian property development scheme, operated by Capital Growth International Club Pty Ltd (CGIC) and All About Property Developments Pty Ltd (AAPD) (refer: 15-137MR).

In delivering the sentence, Judge Kent QC remarked that Mr St Pierre's behaviour was described accurately in his opinion by the Crown as calculated, elaborate, determined and not a fleeting mistake.

ASIC Commissioner Peter Kell said: "Mr St Pierre's actions betrayed the trust of his clients and caused them significant financial harm. This sentence showed such behaviour will not be tolerated.'

The matter was prosecuted by the Commonwealth Director of Public Prosecutions.

Mr St Pierre's recognisance is in the sum of $1000, conditioned that he be of good behaviour for a period of 3 years.

Background

ASIC's investigation found that the customers to whom the loan applications related were elderly and vulnerable and with limited financial means, yet in spite of this, Mr St Pierre encouraged them to borrow against their homes, some of which were unencumbered, to invest with CGIC and AAPD, which promised returns of 12–20% per annum.  

The customers received monthly interest payments from CGIC and AAPD after they invested, however the interest payments stopped shortly before a liquidator was appointed on 28 February 2011.  This left customers without sufficient income with which to repay their loans to Westpac.

Westpac has compensated customers who obtained loans from Westpac through Mr St Pierre in relation to amounts they invested in CGIC.  Westpac has also compensated investors who did not borrow funds from Westpac but claimed to have had some direct contact with Mr St Pierre before making their investment in CGIC. ASIC acknowledges Westpac's commitment to achieving a resolution for the benefit of CGIC investors. (refer: 14-264MR).

In March 2014, ASIC permanently banned Mr St Pierre from engaging in credit activities and providing financial services (refer: 14-043MR).

ASIC'S investigations into CGIC, AAPD and its officers are ongoing.

16-139MR ASIC bans former employee of financial services business

ASIC has permanently banned former AFS licensee employee Mr Nicolai D'Lamartin, of Rosebery NSW, from providing financial services.

In 2014 Mr D'Lamartin was convicted of numerous counts of fraud and related offences under the Crimes Act 1900 (NSW), including impersonating persons and creating and using false documents to gain a financial advantage, larceny and using and possessing other people's identification information.

ASIC Deputy Chair Peter Kell said: 'Banning unscrupulous operators like Mr D'Lamartin will ensure consumers can have trust and confidence in the financial services industry.'

Mr D'Lamartin's convictions came to ASIC's attention in the course of investigating the conduct of an AFSL holder in late 2015. He has the right to appeal to the Administrative Appeals Tribunal (AAT) for a review of ASIC’s decision.

Background

On 27 February 2014 Mr D'Lamartin was convicted of the following:

• 3 charges of fraud under s192E(1)(a) of the Crimes Act whereby he impersonated another person to dishonestly obtain property belonging to another;
• 17 charges of fraud under s192E(1)(b) of the Crimes Act which included conduct where he impersonated another person to dishonestly obtain a financial advantage, or engaged in the unauthorised use of cheques, online bank accounts or credit cards to obtain a financial advantage;
• 2 charges of forgery under s253 of the Crimes Act whereby he falsified bank document and other documents in the names of others, with the intention of having someone else accept them as genuine;
• 1 charge of forgery under s254 of the Crimes Act whereby he used false documents to obtain bank cheques from bank accounts of others;
• 3 charges of larceny under s117 of the Crimes Act whereby he stole cash and property, including drivers licenses and credit cards, from others;
• 2 charges of dealing with identification information under s192J of the Crimes Act whereby he used identification information belonging to two people with the intention of committing fraud;
• 2 charges of possession of identification information under s192K of the Crimes Act whereby he possessed identification information such as drivers licences, credit cards and Medicare cards with the intention of committing fraud; and
• 1 charge of dealing with property suspected of being proceeds of crime under s193C of the Crimes Act.

Mr D'Lamartin was sentenced to an aggregate term of imprisonment of 3 years which commenced on 21 November 2012 with a non-parole period of 20 months.