ASIC bans adviser over licence breach, superannuation advice

In a public update, ASIC stated that Sydney-based financial adviser Sam Maxwell Henderson has been banned from providing financial services for a period of three years following an ASIC surveillance.

Mr Henderson was an authorised representative, responsible manager, director and chief executive of Australian financial services (AFS) licensee Henderson Maxwell Pty Ltd.

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Surveillance conducted by ASIC found that Mr Henderson had failed to act in the best interests of his clients, provide appropriate advice and to prioritise his clients’ interests when providing personal financial advice. This led to clients either losing money or being at risk of losing money.

“In one example, Mr Henderson failed to adequately investigate and assess his clients’ existing deferred benefit superannuation products,” ASIC stated.

“This resulted in a financial loss of several thousand dollars to one client when they rolled over their deferred benefit. Another client, who did not roll over their deferred benefit, would have incurred a $500,000 loss had they implemented Mr Henderson’s advice.”

ASIC also found that Mr Henderson did not properly document or investigate his clients’ existing products, failed to provide advice that was relevant to their specific goals and recommended the use of in-house Henderson Maxwell products without providing product comparisons or justifying why the in-house products were better than his clients’ existing products.

Mr Henderson, as director and responsible manager, was also involved in Henderson Maxwell breaching its obligation as an AFS licensee to disclose information about relationships or associations that could influence the financial advice provided.

This breach came about because, in 2013, Mr Henderson’s SMSF in Managed Account Holdings Limited (MAHL).

ASIC explained that a subsidiary of MAHL provided managed discretionary account services to Henderson Maxwell. Henderson Maxwell had failed to disclose this interest in two Financial Services Guides given to clients.

ASIC Commissioner Danielle Press said financial advisers are required by law to act in the best interests of their clients and prioritise clients’ interests over their own when providing personal advice.

“They must make every effort to adequately consider their clients’ personal circumstances, needs and goals before providing advice,” said Ms Press.

“If providing advice about product switching or recommending in-house products, we expect advisers to demonstrate how their clients’ interests are being prioritised, especially if in-house products have higher ongoing fees. AFS licensees are responsible for ensuring that they disclose any associations that could potentially influence the financial advice they provide.”

Ms Press said ASIC is committed to taking action against financial advisers and AFS licensees who do not comply with financial services laws and engage in conduct resulting in financial loss to consumers.

ASIC said the banning of Mr Henderson is part of its ongoing efforts to improve standards across the financial services industry.

It also stated that its investigation into Mr Henderson’s conduct is continuing.