The penalties follow a court finding in February 2024 that RM Capital had failed to take reasonable steps between August 2013 and August 2016 to ensure that SMSF Club did not accept conflicted remuneration.
The court also made findings that on multiple occasions between November 2014 and July 2016 SMSF Club accepted conflicted remuneration. It found that SMSF Club received a total of $135,863.65 in referral fees from real estate agent Positive RealEstate Pty Ltd (for assisting SMSF Club clients to set up a self-managed superannuation fund (SMSF) and purchase property from Positive RealEstate.
The referral fees were paid as part of a referral agreement between SMSF Club and Positive RealEstate. On each occasion it accepted a referral fee, SMSF Club breached the provision of the Corporations Act that prohibits an authorised representative from accepting conflicted remuneration.
As the licensee that authorised SMSF Club to provide financial services, RM Capital contravened s963F of the Corporations Act by failing to take reasonable steps to ensure SMSF Club did not accept the payments.
Sarah Court, ASIC deputy chair, said the court’s judgment reflects RM Capital’s systemic failure to uphold important consumer protection safeguards over a sustained, three-year period.
“RM Capital should have provided proper oversight of SMSF Club as an authorised representative in relation to its compliance with the conflicted remuneration provisions,” she said.
“Conflicted remuneration has the potential to cause consumers to be given financial product advice that is weighted to the provider’s interests and may not suit consumers’ needs.”
In his decision, Justice Jackson said he was conscious that RM Capital is a small organisation with limited resources.
“But in its capacity as an AFSL holder, these responsibilities were not mere inconvenient distractions from its business activities; they were core responsibilities,” he said.
“That RM Capital took this passive approach even in the face of an ASIC investigation, an adverse liability judgment, and an approaching penalty hearing, suggests that from the point of view of specific deterrence, at least, a high penalty may be necessary to motivate it to change its approach.”
His Honour ordered that within six months:
- RM Capital is to provide ASIC with a written report of an independent expert stating whether it has in place appropriate systems, policies and procedures to ensure that its representatives comply with s963G(1) of the Corporations Act; and
- SMSF Club is to provide ASIC with a written report of an independent expert stating whether it has in place appropriate systems, policies and procedures to ensure that it complies with s963G(1) of the Corporations Act.
