AAT dismisses adviser banning appeal
The AAT has dismissed a financial adviser’s banning appeal after failing to appear at a directions hearing.
The Administrative Appeals Tribunal (AAT) has dismissed an application for review of ASIC’s decision to permanently ban former financial adviser Robert Hutchison from providing financial services.
Mr Hutchison had failed to appear at an AAT directions hearing dealing with the review application after remittal from the Federal Court. The AAT then dismissed the matter for non-appearance.
Mr Hutchison was permanently banned by ASIC from providing financial services in 2017.
“ASIC had found that between January 2011 and November 2012, as a financial adviser and authorised representative of RI Advice Group, Mr Hutchison dishonestly banked cheques he received from his clients for advice fees directly into his personal bank account, when he knew he was obliged to remit or report them to RI Advice,” ASIC said in a statement.
“Mr Hutchison then deducted additional fees from his clients’ investment platform or financial product for payment to RI Advice and banked cheques he received from his clients for advice fees directly into his personal bank account and failed to record the receipt of the cheques on RI Advice’s payment system.”
The regulator found Mr Hutchison misled or deceived his clients by failing to disclose that they had been charged advice fees twice and failed to comply with the proper process for remitting and reporting the fees.
ASIC further found Mr Hutchinson misled or deceived RI Advice by failing to disclose that he had deposited the advice fees into his own account and did not comply with RI Advice’s relevant fees policies and procedures.
Mr Hutchison applied to the AAT for review of ASIC’s decision and on 18 September 2018, the AAT set aside ASIC’s decision to permanently ban Mr Hutchison from providing financial services. The AAT found Mr Hutchison did not engage in dishonest conduct or misleading or deceptive conduct for the purposes of sections 1041G and 1041H of the Corporations Act (the act).
The AAT was also not satisfied that Mr Hutchison deliberately falsified documents submitted to RI Advice or that the documentation was misleading, or that he concealed from clients that he intended to withhold fees from RI Advice. Furthermore, the AAT stated that even if there were misrepresentations between Mr Hutchison and RI Advice, this did not fall within s1041H.
ASIC appealed the AAT’s decision to the Federal Court and on 13 July 2020, the Federal Court upheld ASIC’s appeal and set aside the AAT’s decision.
“The Federal Court found the AAT had interpreted the scope of sections 1041G and 1041H too narrowly and confirmed a broad scope of these prohibitions,” ASIC said.
“The Court confirmed that an indirect connection between a person’s dishonest or misleading conduct and a financial product or service is enough for the prohibitions to apply.
“The matter was then remitted back to the AAT to be re-determined. These were the proceedings to which Mr Hutchison did not appear and led to the dismissal for non-appearance.”