Federal Court hands down $6m penalty over inappropriate retirement advice
RI Advice Group has been ordered to pay a $6 million penalty after one of its authorised representatives allegedly advised clients to invest in complex products that were unsuitable.
In a public update, ASIC stated that the Federal Court had ordered RI Advice Group to pay a $6 million penalty for failing to take reasonable steps to ensure that its authorised representative, John Doyle, provided appropriate financial advice, acted in his clients’ best interests and put clients’ interests ahead of his own.
Mr Doyle, a former financial adviser and authorised representative of RI Advice, was ordered to pay an $80,000 penalty following allegations that he inappropriately advised clients to invest, and stay invested, in complex structured financial products.
“Mr Doyle received upfront and ongoing commissions for each of his clients’ investments in the structured products. Mr Doyle had admitted the allegations against him,” said the corporate regulator.
Justice Moshinsky of the Federal Court found that RI Advice, an Australian financial services licensee, did not have adequate processes to identify when advisers were avoiding internal advice quality checks or were recommending non-approved financial products.
Although RI Advice’s conduct was not deliberate and it had paid compensation to Mr Doyle’s clients, the court said its breaches of the law were serious and sustained, and the monitoring flaws should have been apparent to RI Advice.
The court also found RI Advice failed in its obligations as a financial services licensee.
ASIC deputy chair Sarah Court said these complex products were not suitable for Mr Doyle’s clients, many of whom were approaching retirement.
“RI Advice should have been properly monitoring Mr Doyle’s advice to ensure he was complying with the law,” said Ms Court.
The conduct of both RI Advice and Mr Doyle was examined as a case study as part of the Financial Services Royal Commission.
Miranda Brownlee
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 also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
