ASIC surveillance of Wayne Blazejczyk, an authorised representative, responsible manager and director of licensee Ballast Financial Management, found that he had recommended clients with low super balances set up SMSFs when the costs involved with running the funds were higher than their existing super fund.
ASIC noted that it had recently updated its information sheet around disclosure of costs when giving advice on SMSFs to reflect a recent Productivity Commission report which found SMSFs with balances of under $500,000 on average produced lower returns than APRA-regulated funds with similar balances.
The guidelines note that “in many cases”, recommending a client with less than $500,000 set up an SMSF “may not be in their best interests”, except in cases such as where the SMSF is being used to purchase business real property or the trustee is undertaking most of the administration themselves.
In addition to noting the balance levels of the clients were not sufficient for an SMSF to be appropriate, the corporate regulator found in its investigation that Mr Blazejczyk had failed to make adequate inquiries into his clients’ personal circumstances before recommending they set up the SMSFs.
He had also failed to disclose his personal interest in one of the managed funds in which the clients were investing, the Bateau Global Opportunities Fund.
“ASIC expects financial advisers to take reasonable steps to identify and consider their clients’ personal circumstances when providing personal advice,” the regulator said in a statement.
“Advisers have a legal obligation to prioritise their clients’ interests and to comply with the best interests duty when providing personal advice.”
Mr Blazejczyk had been an authorised representative of Ballast Financial Management since 2003.
