Speaking before the parliamentary joint committee on corporations and financial services, ASIC deputy chair Peter Kell said that the Federal Court had imposed a civil penalty of $1 million on financial advice firm NSG, marking the first time the court has issued a penalty for a breach of the best interests duty.
In early April this year, the Federal Court ruled that the Melbourne financial advice firm breached the Corporations Act after it advised its clients to roll over superannuation accounts to costly and unsuitable financial arrangements.
“[NSG’s] clients were commonly sold insurance and advised to roll over super accounts that committed them to costly, unsuitable and unnecessary financial arrangements,” Mr Kell said.
“The judge has remarked that he found the contraventions ‘very serious’.”
ASIC senior executive leader for financial services enforcement Tim Mullaly said the regulator expected NSG to be able to pay the fine.
“We’ve discussed with them the potential of paying that by term over a period of time to ensure that we are able to collect on that penalty… I don’t think there’s a written judgement as yet,” he said.
Mr Kell added “the judgement will be very interesting reading”.
