ASIC launches court proceedings over conflicted SMSF advice
ASIC has commenced civil penalty proceedings against an SMSF advice firm in the Federal Court over allegations that it received conflicted remuneration for advising clients to set up SMSFs to buy property.
In a public statement, ASIC stated it has commenced civil penalty proceedings in the Federal Court against R M Capital Pty Ltd and its authorised representative, The SMSF Club Pty Ltd, in relation to accepting conflicted remuneration.
ASIC alleges that SMSF Club advised its clients to set up SMSFs then use their SMSF to buy real property marketed by a real estate agent, Positive RealEstate Pty Ltd.
ASIC also asserts that SMSF Club had referral agreements with Positive RealEstate and that RM Capital was aware of this referral agreement.
The corporate regulator contends that from December 2013 to July 2016, each time an SMSF Club client used their SMSF to buy a property marketed by Positive RealEstate, Positive RealEstate paid around $5,000 to SMSF Club. At times, Positive RealEstate paid these amounts directly to SMSF Club, while at others it paid them to RM Capital who passed on the majority to SMSF Club.
ASIC alleges that SMSF Club accepted more than $730,000 in conflicted remuneration from Positive RealEstate.
ASIC’s case is that the payments could reasonably be expected to have influenced financial product advice given by SMSF Club to its clients, and so constituted banned conflicted remuneration under the Corporations Act.
It is also alleges that RM Capital was aware of the payments and did not take reasonable steps to stop the SMSF Club from accepting them. ASIC contends that as the authorising licensee for SMSF Club, RM Capital’s failure to take reasonable steps to ensure SMSF Club’s compliance also breached the law.
ASIC is seeking declarations of contravention, civil penalties and compliance orders against both RM Capital and SMSF Club.
“This will be the first case concerning the alleged breach of conflicted remuneration provisions,” ASIC said.
“ASIC will contend that SMSF Club and RM Capital contravened the Act on as many as 259 occasions each. Each contravention attracts a potential civil penalty of up to $1 million.”
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.