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.
