Adviser banned for inappropriate advice

A Sydney financial adviser has been banned from providing financial services for three years after failing to ensure his advice was appropriate to the client’s needs.

The Australian Securities and Investments Commission (ASIC) banned Graham Flegg after an investigation found he had arranged for a retiree couple to invest all of their $1,000,000 superannuation into a risky unsecured product known as Elm Nominees in February 2004.

The product was offered by Elm Nominee Services Pty Ltd, a company related to former Australian Financial Services licensee Elm Financial Services Pty Ltd, where Flegg was an authorised representative from November 2001 until November 2004.

Elm Nominee Services Pty Ltd defaulted on its obligation to repay the couple.

ASIC found Flegg breached the Corporations Act in failing to make independent enquiries into the nature of the investment and subsequently ensure his advice was appropriate to the client’s needs.

ASIC’s investigation also revealed Flegg recommended the couple put $40,000 in another investment in November 2003 that he failed to provide a written Statement of Advice for, as required under the law.

“Representatives of financial services licensees have a duty to provide advice that meets their client’s specific needs and take into consideration their individual circumstances,” ASIC deputy executive director of enforcement Allen Turton said.