NSW adviser banned over inappropriate advice
An NSW-based adviser has been banned from providing financial services for five years and the AFSL of his business Build Your Wealth has been cancelled by ASIC.
Christopher Edward Luff was referred to an ASIC delegate in relation to concerns about financial product advice he provided, his management of conflicts of interest, and for his involvement in a self-managed superannuation investment structure where clients subsequently invested in the Storehouse Residential Trust.
The Storehouse Residential Trust received an interim stop order due to deficiencies in the target market determination (TMD) on 1 September 2023. Following the interim stop order, the responsible entity of the fund, K2 Asset Management Ltd (K2), made amendments to the TMD that addressed ASIC’s concerns. As a result, on 15 September 2023, ASIC revoked the interim stop order and no final stop order was made.
A review of Luff’s client advice files found he did not act in the best interest of clients and the advice was not appropriate.
This was because he:
- Limited the scope of the advice.
- Failed to make reasonable enquiries into the client’s relevant financial situation, objectives, needs and goals – therefore failing to base the advice on those circumstances.
ASIC established that there was a conflict between the interests of Luff and those of his clients, due to the relationships between Build Your Wealth, the investment manager of the Storehouse Trust, Storehouse Pty Ltd (which was also an authorised representative of Build Your Wealth), and associated entities.
It also found that he failed to prioritise the interests of his clients when he recommended that they enter into an ongoing service program without assessing if they required the service or could afford the service.
Finally, Luff failed to enquire of his clients as to why they wanted to invest in the Storehouse Trust and that the clients should have been made aware of:
- The risks of investing in the Storehouse Trust.
- The potential risk of losing all their funds with such an investment.
- The risk to the security of their living arrangement.
- The risks if the trust did fail.
ASIC further determined that Build Your Wealth, based in Campbelltown, NSW, failed to ensure that the financial services it provided were done so efficiently, honestly and fairly, and that it failed to take reasonable steps to ensure its representatives complied with financial services laws.
The banning and cancellation order took effect from 9 April 2024.
Luff and Build Your Wealth Pty Ltd applied to the Administrative Appeals Tribunal (AAT), seeking a confidentiality order, a review and a stay of ASIC’s decision. The AAT granted an interim stay which was in effect from 30 April 2024 to 24 July 2024. The AAT refused the substantive stay application and confidentiality orders on 17 July 2024. No hearing date has been set for the substantive review of ASIC’s decision.
The banning has been recorded on ASIC’s publicly available Financial Advisers Register and the Banned and Disqualified register.
AUTHOR
Laura Dew
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