Adviser receives ban over inappropriate superannuation advice
ASIC has banned a Queensland adviser for five years after its surveillance found that he had provided inappropriate advice to clients in relation to insurance in super and understated the cost of running an SMSF to clients.
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.”
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 has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.