.jpg)
DOD Bookkeeping Pty Ltd (in liquidation), previously Equiti Financial Services Pty Ltd (Equiti FS), has been penalised $11,030,000 after the Federal Court found it breached conflicted remuneration rules and its advisers provided inappropriate “cookie cutter” advice.
Equity FS paid $130,250 in bonuses to three financial advisers who provided template advice to clients to roll over their super into self-managed super funds (SMSFs) and use those funds to buy property through a related entity, Equiti Property Pty Ltd.
The Court found that in the case of 12 clients who gave evidence to the Court, the advice provided was "cookie cutter" and failed to take into account each client’s individual circumstances or objectives.
The Court also found that the bonuses paid to the three advisers, which were paid when the clients settled on property offered through Equiti Property, influenced the advice they provided and breached conflicted remuneration laws.
ASIC Deputy Chair Sarah Court said, “Misconduct exploiting superannuation savings is an ASIC enforcement priority. In this case the Court found bonuses paid to advisors influenced the advice they provided, resulting in poor financial outcomes for the consumers involved. Financial services licensees who employ advisers to provide personal financial advice need to ensure that they place their clients at the forefront.
“The size of today’s penalty demonstrates the seriousness of this misconduct.”
In his judgments, Justice Goodman observed that “little or no heed was paid to the particular circumstances of the clients”, with clients not being given sufficient time to understand the advice given to them and advice being focussed on “manoeuvring the clients into property purchases through SMSFs”.
His Honour said, “The contravening conduct was plainly deliberate and extended over a period of several years”.
ASIC cancelled Equiti FS’s Australian financial services licence on 7 November 2024.
Download
Liability Judgment (PDF 562 KB)
Background
Equiti FS provided financial advice to clients and offered SMSF establishment and administration services. A related real estate licensee, Equiti Property Pty Ltd, recommended properties to purchase and another related entity, Equiti Finance Pty Ltd, offered mortgage broking services.
ASIC’s Report 575 SMSFs: Improving the quality of advice and member experiences was published in June 2018. It identified property one-stop shops tended to promote the purchase of geared residential property through an SMSF. ASIC was concerned with conflicts of interest that can arise in such models, including from representative remuneration structures.
ASIC updated its guidance on conflicted and other banned remuneration (RG 246) in December 2020. In July 2021, the Treasury published ASIC’s report on Ending grandfathered conflicted remuneration.
Conflicted remuneration laws prevent the payment and receipt of benefits that could reasonably be expected to influence the financial advice given to clients or the choice of financial product recommended to clients.
ASIC released Information Sheet 274 Tips for giving self-managed superannuation fund advice in December 2022, to help advice providers comply with their legal obligations when giving advice about self-managed superannuation funds (SMSFs).
ASIC’s Moneysmart website has information for consumers about financial advice, including choosing a financial adviser, understanding if a SMSF is right for you and SMSFs and property.
