ASIC bans adviser over SMSF property, loans advice
A Gold Coast adviser has received a five-year ban from providing financial services after surveillance conducted by ASIC found he had failed to act in the best interests of clients when advising them on to set up SMSFs to purchase property.
In a public statement, ASIC said it has banned Gold Coast adviser Daniel John Renneberg from providing financial services for five years after a surveillance found that he had failed to act in the best interests of his clients.
ASIC said it reviewed the advice Mr Renneberg had provided to 15 of his clients while he was an authorised representative of Austplan Pty Ltd.
On reviewing the files, ASIC found that Mr Renneberg received referrals from GM Homes Australia Pty Ltd (GM Homes) to help their clients establish SMSFs to purchase an investment property.
“ASIC found that Mr Renneberg had not provided the clients appropriate financial advice or acted in their best interests. He had advised some clients to set up SMSFs with limited recourse loan arrangements that were completely unsuitable and placed his clients in a vulnerable financial position,” the corporate regulator stated.
“Mr Renneberg completely failed to consider his clients’ needs, objectives and circumstances. Mr Renneberg also failed to give his clients statements of advice that set out the advice he provided and the information on which he based his advice.”
ASIC commissioner Danielle Press said that SMSFs are not for everyone, and using an SMSF to borrow money and buy a property is a high-risk strategy.
“ASIC will be looking very carefully at advisers who recommend this strategy and taking swift action where we see problems,” Ms Press said.
“Financial advisers must not rely solely on client direction when establishing an SMSF. They must adequately demonstrate why an SMSF is appropriate and why it is in their clients’ best interests.”
Ms Press said that ASIC expects financial advisers to use their skills, expertise and judgement in determining whether an SMSF is indeed appropriate for their clients’ personal circumstances and needs.
“An SMSF comes with a lot of responsibility and involves significant time and effort and may be suitable if consumers have extensive knowledge of financial and legal matters. They also need to consider their legal responsibilities and the tax implications when deciding to establish an SMSF,” she said.
ASIC cancelled Austplan’s Australian financial services licence in November last year, following concerns it had about deficiencies in the financial services provided by a number of its representatives.