In February this year, SMSF Adviser reported that the Federal Court had ordered three Melbourne-based companies to pay penalties totalling $7,150,000 for engaging in numerous contraventions of financial services and consumer protection laws.
The breaches of financial services laws arose from a business conducted by Wealth and Risk Management Pty Ltd, Yes FP Pty Ltd, now in liquidation, and Jeca Holdings Pty Ltd, also in liquidation, which offered and gave cash payments to financially vulnerable clients in connection with the provision of financial advice.
According to ASIC, the business advertised ‘fast cash’ to consumers with poor credit histories seeking loans and required consumers to receive and implement financial advice that recommended switching their superannuation and taking out ‘high end’ insurance.
It charged advice fees that were paid out of consumers’ superannuation funds and received upfront and trailing insurance commissions, and used the upfront insurance commission generated by the financial advice to provide a ‘cash rebate’ to clients, ASIC said.
ASIC has now cancelled the Australian Financial Services Licence (AFSL) of Wealth & Risk Management Pty Ltd.
As WRM has ceased to carry on its financial services business, ASIC cancelled the AFSL under s915B(3)(a) of the Corporations Act 2001 (Cth).
WRM’s cancellation became effective on 14 May 2018.
Good to see this dodgy advice out. However, can’t help but wonder about all the clients who were advised to switch from other super arrangements, often losing insurances or other benefits when they received unsolicited calls or letter s from Industry Superannuation funds. I have a client who received a “Good News, we found your lost super!’ letter from an ISA fund, and didn’t realise they were referring to her very active fund that holds a huge portion of her insurances. Needless to say, the ISA fund won’t discuss this with her or us, the superannuation complaints pathway is long and laborious, and ASIC so far have refused to look into it. Seems ASIC’s scope is ‘planners’ rather than wrongful advice.