Financial Circle slapped with interim injunctions
A financial services company which allegedly tied loans to the provision of financial advice has been issued with injunctive orders restraining it from engaging in several business activities, including providing financial advice or carrying on a financial services business, by the Federal Court of Australia.
The Australian Securities and Investments Commission (ASIC) commenced proceedings against Financial Circle in the Federal Court last month. The regulator sought injunctive relief, declarations of contraventions and financial penalties following allegations of misleading, deceptive and unconscionable conduct.
ASIC alleged that Financial Circle’s loans required consumers to obtain and implement financial advice, which recommended they purchase personal insurance products and switching superannuation providers.
Significant fees would be paid to Financial Circle from the consumer’s superannuation and in commissions from the insurers when the advice was implemented.
Following a contested hearing on 22 December, 2017, Financial Circle undertook that until 10 January, 2018 it would not carry on a financial services business, provide financial product advice or deal in financial products, enter into credit contracts as a credit provider, or promote, advertise or offer loans or cash payments to prospective retail clients.
The Court ordered on 10 January, 2018 that Financial Circle could not engage in any of the above activities until the final hearing of the matter.
These interim injunctive orders were made on the basis that there was an “appreciable risk” of future contraventions by Financial Circle of the laws relied on by ASIC in the proceedings.
AUTHOR
Hannah Wootton
Recommended for you
With regional and rural suburbs exhibiting high spare capacity to invest, Money Management speaks to three regional advisers on the opportunities beyond the major cities and the importance of a strong network.
Platform consolidation is expected to accelerate among financial advisers this year, as software company Finura pinpoints which two platforms are set to be the winners, thanks to this trend.
The software provider has made several appointments in its APAC wealth propositions team, with a focus on driving growth across digital advice, Xplan and strategic partnerships.
The platform has announced it plans to close its Xplore managed discretionary account service in 2026 which holds $2 billion in funds under administration.
