Gold Coast SMSF accountant Jenan Oslem Thorne – alternatively known as Cenan Thorne and Cenan Dikmen, of Saber Superannuation Pty Ltd , has been compelled by the Federal Court of Australia on 11 March 2021 to comply with the terms of a court-enforceable undertaking (CEU) that she previously entered with ASIC.
Ms Thorne was found to have broken a deal with the ASIC by directing that alerts about her conflicted financial advice not be sent to SMSF clients who had complained.
She first entered into a CEU with ASIC on 13 February 2019, following an ASIC investigation that found she failed to act in her clients’ best interests and that she prioritised her own interests above those of her clients.
On 17 November 2020, ASIC commenced civil proceedings against Ms Thorne, alleging that she took deliberate steps to avoid compliance with the CEU.
After ASIC filed these proceedings, Ms Thorne agreed to orders requiring compliance with the CEU.
The court also ordered that Ms Thorne correspond with relevant consumers to provide them with information regarding the CEU and to notify ASIC of her compliance with the orders.
“In my view, in light of the evidence before the court, it is clear that Ms Thorne did not comply with the EU, and that the power of the court to make orders pursuant to s 93AA(4)(a) of the ASIC Act is enlivened,” Justice Berna Collier said.
“Further, there is no evidence before me that Ms Thorne used her best endeavours to comply with the undertaking.
“Rather, such evidence as is before me suggests that Ms Thorne deliberately sought to avoid proper compliance with the terms of her EU by obfuscation in respect of such information as she provided to clients, and in respect of her apparent endeavours to prevent communications actually reaching clients.”
ASIC commissioner Danielle Press said ASIC first took action in this matter “because the law requires that financial advisers act in their clients’ best interests”.
“Those providing financial services must not prioritise their own interests or simply implement client instructions,” Ms Press said.
“Individuals and organisations entering into court-enforceable undertakings with ASIC have binding obligations that must be met to ensure compliance. ASIC will not hesitate to take action against those who don’t comply with their obligations.”
The court also ordered that Ms Thorne pay $16,529.78 for ASIC’s costs of the proceeding.
ASIC accepted a court-enforceable undertaking from Ms Thorne in February last year after it found she had failed to act in the best interests of her clients and had prioritised her own interests above their interests.
Ms Thorne’s advice was reviewed by ASIC during its investigation into Park Trent Properties Group Pty Ltd. ASIC claims that Ms Thorne was receiving referrals from Park Trent to establish SMSFs.
ASIC reviewed advice provided by Ms Thorne when she was a representative of SMSF Advice Pty Ltd, a wholly owned subsidiary of AMP Ltd, and concluded that she had advised some of her clients to establish SMSFs without taking their circumstances into account.
The regulator found that Ms Thorne hadn’t properly considered her clients’ existing superannuation arrangements or explored why they were interested in investing in direct residential property through an SMSF.
When recommending SMSFs to some of her clients, she had inappropriately scoped advice by excluding insurance and retirement planning.
ASIC also found that Ms Thorne did not adequately stress-test SMSF strategies and had recommended SMSFs to some of her clients despite inadequate evidence to suggest that the strategies would provide increased retirement benefits.
Furthermore, Ms Thorne had recommended that her accountancy practice, Saber Accountants Pty Ltd, prepare the annual accounts and tax returns for the SMSF clients. This led ASIC to determine that Ms Thorne recommended the services of a related party to create extra revenue for herself.
As part of the EU, Ms Thorne had agreed to inform all her former personal advice clients about the EU and provide contact details of her former licensee, SMSF Advice Pty Ltd.
She shouldn’t have gotten licensed as she wouldn’t have a problem then.
This prosecution might have been avoided by removing the core problem: Commissions (kickbacks).
This behaviour is quite sickening, so stop pussyfooting around and just BAN commissions in the financial services sector.
Erm… they are banned for all financial products.
The reason this case represents a problem is real estate is not defined as a financial product under the corps act therefore falls outside of the regs. This is (it appears at least) an accountant being paid a commission by a real estate agent who then also benefits from ongoing compliance costs of the SMSF’s she sets up.
I would like to hear a lawyers opinion on this but I think an unlicenced accountant can be paid commissions from estate agents but a licenced financial adviser cannot. Esp under FASEA.
An unlicensed accountant can get paid commissions and plenty do.
Why is she still allowed to practice.
I’m sick of hearing about both accountants and advisors who do this kind of thing (and more extreme things) getting either slaps on the wrist, or very minor sentences (can’t practice for 5 years).
We need to, as a collective industry, say that these minimal punishments aren’t tough enough. Where there is a deliberate act involved people need to be rubbed from the industry entirely.
Great so ASIC thoroughly investigated an Accountant who was licensed. When is ASIC going to take action against all the accountants who are still setting up SMSFs without a licence? I have not seen a single case prosecuted by ASIC. It is pretty easy to identify. Just have a look at the tax agents lodging SMSF tax returns when the SMSF is a newly registered fund and then check to see if the tax agents is licensed. Also the “online” set up industry continues to operate. I don’t understand how a client can go on and set up an SMSF with no advice and the online provider also provides the administration and audit sometimes with a first year free option.
A good example for accountants who thought they could wear “two hats” and be a financial adviser as well as an accountant. Once the financial planner hat is on it stays on, and effectively you have a best interest duty to every client you dispense any type of advice to, particularly where that borders on personal and financial product advice.
The Government has already recognised that excluding accountants from SMSF advice as well as their ill-conceived limited licensing regime have failed.
Now we have a huge vacuum in SMSF advice because dealer groups post royal commission won’t let their advisers work in the SMSF space, and accountants have their livelihood threatened.
Removing the accountants exemption was the result of clever lobbying of Government by the financial services industry & industry funds that SMSFs were a risk, when the real agenda was to stop the exodus of funds under management.
The SMSF space has always belonged to the accounting sector and that will never change. The sooner policy makers realise that, the sooner accountants can get back to work assisting self-directed SMSF trustees who don’t want or need financial planning advice.
I didn’t know that SMSF’s “belonged” to anyone except the trustees and members???
You can use an administration service and not need an accountant, you can do your own investments and not need an adviser. I would never presume that something with so much money in it will “belong” to one group of professionals only. It’s an area ripe for disruption.
Shouldn’t she be immediately stripped of all licesnes and advised if she continues to trade will be charged with a crime and go to jail?
Good luck with this enforcement, she has not done any of the others! The law does not apply to her apparently.
Does it matter who she is married to? Do you name the wives of male accountants?