ASIC issues civil penalty action against Equiti FS
The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings in Federal Court against DOD Bookkeeping, now in liquidation, previously known as Equiti Financial Services (Equiti FS).
ASIC alleged Equiti FS breached the prohibition against conflicted remuneration and failed to provide appropriate financial advice and discharge its best interests duty in relation to financial advice to selected clients.
Equiti FS was part of a group of companies called Equiti Group which offered self-managed super fund (SMSF) establishment.
ASIC alleged that between 26 October, 2015, to 27 August, 2018, Equiti FS paid three advisers bonuses totally $164,750 upon settlement of property purchases those advisers recommended their clients make through either an existing SMSF or an SMSF to be established.
The bonuses applied to purchases arranged by Equiti Property, another company part of Equiti Group.
ASIC alleged these bonuses breached the ban on conflicted remuneration under the Corporations Act 2001 because they could reasonably be expected to influence the financial product advice provided or choice of product recommended.
It was also alleged between 18 May, 2015, and 13 February, 2018, it breached the Corporations Act when its employed advisers gave financial advice on 12 occasions that was not in their clients best interests and was not appropriate for their clients.
Each advice contained a recommendation to establish an SMSF, purchase a property through the SMSF and borrow funds to do so.
AUTHOR
Chris Dastoor
Recommended for you
Insignia Financial has reached a major milestone in completing the separation of MLC Wealth from NAB, having acquired the firm back in 2021.
There could be changes ahead for how ASIC requires licensees to handle conflicts of interest as the corporate regulator announces it will be meeting key stakeholders next year to update guidance.
Proper recordkeeping has been described as the “mortar between the bricks” of the advice process and critical to an FSCP decision as an adviser is suspended for failures in this area.
As investors increasingly seek to embed ESG considerations in their portfolios, a specialist adviser has offered tips for financial planners who may feel overwhelmed in tackling these complex topics with clients.
