Cancellation and 10-year bans for ‘layered advice’ approach

The Australian Securities and Investments Commission (ASIC) has banned two responsible managers for 10 years and cancelled the Australian financial services (AFS) licence of National Advice Solutions.

National Advice Solutions used a ‘layered advice’ approach whereby the licensee separated the advice into pre-determined topics, regardless of the client’s personal circumstances, goals or advice needs. Its cancellation was effective from 13 December, 2022.

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The ‘layered advice’ approach was found to actively impede financial advisers from complying with the financial services laws, as clients were provided with expensive and templated advice that was inappropriate for their personal circumstances.

This was ASIC’s second AFS cancellation regarding ‘layered advice’ following the Smart Solutions Group in February 2020.

Responsible managers, Gail Glasby and Paul Carcallas, based in the Gold Coast, were banned from providing financial services for 10 years after they failed to adequately monitor and supervise its authorised representatives and maintain competence to provide the financial services covered by its licence.

ASIC also found the pair bore part of the responsibility for the systemic failings that arose from the use of the ‘layered advice strategy’.

Carcallas also provided financial advice and ASIC found he did not act in their best interest, gave inappropriate advice and prioritied his own or the licensees’ interest over the client. Advice was templated, inappropriately scoped, and he failed to identify or consider the relevant circumstances of the clients when preparing the advice.

Further, ASIC found that the statements of advice (SOAs) provided were defective, contained projections not based on recommendations provided and failed to include all costs associated with implementing the recommendations.

ASIC found that these projections were included to persuade the clients to proceed with the advice and cost omissions may have led clients to believe they would have more funds available in retirement than they could realistically expect.

The banning of Glasby and Carcallas would be recorded on ASIC’s publicly available Financial Advisers Register and the Banned and Disqualified Persons Register.

All three parties had the right to seek a review of ASIC’s decision at the Administrative Appeals Tribunal.