Queensland-based adviser Gregory Forster has been banned from providing financial services for a period of five years after surveillance by ASIC showed that he provided inappropriate advice to clients and failed to act in their best interests.
In a public statement, ASIC said that its surveillance looked at advice Mr Forster provided to clients while he was an authorised representative of Australian financial services (AFS) licensees Breakaway Finance Group and ANZ-owned Millennium 3.
ASIC said that the surveillance found that Mr Forster had failed to take into account his clients’ actual circumstances when providing advice, and instead he obtained limited information and made a series of assumptions about their personal circumstances.
“Furthermore, he recommended new superannuation and insurance products to his clients without considering their existing products and services,” the corporate regulator said.
“In many cases, Mr Forster recommended insurance where the premiums were unaffordable. Even though the premiums were paid out of his clients’ superannuation, sometimes they were significantly more than his clients’ normal superannuation contributions, potentially leading to erosion of the clients’ superannuation balance.”
ASIC found that Mr Forster had made those recommendations even though the clients had originally sought his advice because they were unhappy with their superannuation balance.
The ASIC surveillance also found that Mr Forster had significantly understated the costs associated with implementation of his advice, particularly costs associated with running an SMSF.
ASIC found that the true costs of running the recommended SMSF were significantly higher than those disclosed to the client.
In some other cases, ASIC also found that Mr Forster had not complied with the requirements for a Statement of Advice; instead of disclosing the dollar value of fees, he had described fees in percentage terms.
The corporate regulator stated that the banning of Mr Forster is part of ASIC’s ongoing efforts to improve standards across the financial services industry. It will be recorded on ASIC’s publicly available Financial Advisers Register and on Banned and Disqualified Persons Register.
“ASIC expects financial advisers to adequately understand their clients’ personal circumstances and take those circumstances into consideration when providing personal advice,” it said.
“When recommending that clients dispose of or acquire financial products, advisers must fully disclose the costs associated with their advice so that clients can make informed decisions.”
ASIC you need to be very clear on what is appropriate. If a single women in debt of $300K in her late 60’s with no insurance and cannot afford it – does she take the risk of having no income protection/trauma insurance? Say she has less than $200K in super? What you are saying above is NO – take the risk and if you get sick so be it.
Your example in fact highlights the need for full knowledge and assessment of circumstance. It would of course depend on what the loan was on eg million dollar investment property vs 350k home as well as what other assets and income she has.
In the meantime, most of the boards members and management of the large corporates keep their jobs despite not acting in their clients best interests for years. Big, tough ASIC. A total farce.