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Adviser banned for ‘deceptive conduct’ with binding nomination forms

By mbrownlee
23 January 2019 — 2 minute read

A financial adviser has been permanently banned after an ASIC investigation found that he had dishonestly backdated advice documents and incorrectly witnessed binding nomination of beneficiary forms.

ASIC has permanently banned Adelaide financial adviser Tai Thanh Nguyen from providing financial services after an ASIC investigation found that he had engaged in dishonest conduct.

In a public statement, ASIC said it found that Mr Nguyen had dishonestly backdated advice documents to clients, incorrectly witnessed binding nomination of beneficiary forms, created or modified documents on client files produced to ASIC and attempted to induce a client to mislead ASIC.

ASIC also said that Mr Nguyen had further engaged in misleading and deceptive conduct by allowing the “incorrectly witnessed binding nomination forms to be submitted to insurers on behalf of two of his clients”.

He had also failed to comply with a financial services law by implementing financial advice to four clients before they were provided with a statement of advice, the corporate regulator said.

ASIC found that Mr Nguyen was likely to contravene a financial services law for reasons including that he had engaged in dishonest conduct while he was an authorised representative of GWM Adviser Services Limited, and continued to do so while he was an authorised representative of InterPrac Financial Planning.

Moreover, he acted dishonestly in the course of responding to an ASIC statutory notice, ASIC said.

ASIC commissioner Danielle Press said that financial advisers have a critical role to play in helping consumers make confident and informed decisions about financial products.

“They have an obligation to act in the best interests of their clients when providing advice and must adhere to ethical standards and conduct themselves with honesty and professionalism,” Ms Press said.

“ASIC will continue to take action where the conduct of financial advisers is inadequate.”

ASIC said that it expects financial advisers to comply with the law and adhere to ethical standards when providing financial product advice to consumers.

“Financial advisers have an obligation to provide clients with a statement of advice where one is required before implementing the advice on their behalf,” it said.

“They are required to keep proper records and ensure binding nomination of beneficiary forms are properly witnessed.”

In January last year, ASIC said that it has discovered widespread examples of improper and unethical practices in relation to death benefit nomination forms.

One of the common practices that concerned the regulator was financial advisers witnessing or having staff members witness client signatures on binding death nomination forms without being in the presence of the signatory. In other cases, it said forms had been backdated.

“Each of these practices fails to comply with the law and may lead to the nominations being invalid,” ASIC said.

DBA Lawyers director Daniel Butler previously told SMSF Adviser that the issues identified by ASIC were “the tip of the iceberg” with the majority of BDBNs deficient in some way.

“The vast majority of BDBNs are done by non-qualified people and on poor-quality documents,” Mr Butler said.

Institute of Public Accountants senior tax adviser Tony Greco said that a lot of these practices occur because the topic of estate planning is often avoided and left to the last minute when the unexpected happens.

“No one wants to talk about death, no one wants to talk about succession planning, and it’s an Australia-wide issue that we don’t want to talk about these things,” Mr Greco previously said.

SMSF Adviser has reported on countless issues and disputes involving BDBNs in the past, including the case Cantor Management Services Pty Ltd v Booth 2017, where the critical issue was whether the BDBN had been given to the trustee and was therefore valid.

Perry v Nicholson [2017] QSC 163 was another BDBN-related case which highlighted how critical change of trustee documentation is.

The risk of litigation for SMSF professionals arising from poorly constructed BDBNs has also been well-documented, with one industry lawyer warning practitioners that the number of cases involving incorrect wording or terms in BDBNs had grown “out of control”.

Miranda Brownlee

Miranda Brownlee

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: miranda.brownlee@momentummedia.com.au


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