Federal Court orders over $7 million in fines

australian securities and investments commission Joshua Fuoco federal court

8 February 2018
| By Hannah Wootton |
image
image
expand image

The Federal Court has penalised three companies with fines of over $7,000,000, following the Australian Securities and Investments Commission (ASIC) proving that they offered and gave cash payments to financially vulnerable clients in connection with the provision of financial advice.

The Court found that the three companies, Wealth and Risk Management (WRM), Yes FP and Jeca Holdings (trading as Yes FS), ran a business model meant that all three engaged in unconscionable conduct. The businesses:

  • Advertised ‘fast cash’ to consumers seeking loans who had poor credit ratings
  • Made consumers receive and implement financial advice to switch their superannuation and take out ‘high end’ insurance
  • Charged advice fees that were paid out of consumers’ super funds
  • Received upfront and trailing insurance commissions, and
  • Used the upfront insurance commission to provide a ‘cash rebate’ to clients.

It also ruled that WRM breached its Australian financial services licence (AFSL) obligations. The company did not take reasonable steps to ensure its representatives acted in clients’ best interests or ensure that it provided financial services efficiently, honestly and fairly.

Yes FS was found guilty of carrying on a financial services business without holding an AFSL. It also made false and misleading representations and engaged in misleading and deceptive conduct.

The three companies were penalised $7,150,000. The Court also restrained them from carrying on a financial services business for 18 years. It permanently banned them from making any offers of cash payments in connection with providing financial advice or entering into or advertising Cash Rebate Agreements or other like arrangements.

A former director of the companies, Joshua Fuoco, was ordered to pay $650,000 after the Court found he was knowingly concerned in the breaches. In a settlement with ASIC, he also agreed to an order restraining him from providing financial services for 10 years. In a settlement with ASIC, he also agreed to an order restraining him from providing financial services for 10 years.

ASIC deputy chair, Peter Kell, welcomed the result, saying that “this is a significant outcome in a case where a financial services business has deliberately flouted the law and targeted financially vulnerable customers.”

The companies and Fuoco were ordered to pay ASIC’s costs. Fuoco also agreed to pay $100,000 toward the regulator’s costs of conducting both its investigation and the court proceeding.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Interesting. Would be good to know the details of the StrategyOne deal....

4 days ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 days ago

increased professionalism within the industry - shouldn't that say, FAR register almost halving in the last 24 months he...

4 weeks 1 day ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 3 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

2 days 22 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 1 hour ago