The Australian Securities and Investment Commission (ASIC) has banned Perth financial adviser Jason Sean Atkins from providing financial services for a period of three years.
ASIC found that Mr Atkins provided advice to clients to establish a self–managed superannuation fund (SMSF) and use limited recourse borrowing arrangements to fund the purchase of real property that was in breach of the best interests duty introduced under the Future of Financial Advice (FOFA) reforms.
ASIC Commissioner John Price said:
Financial advisers must act in the best interests of their clients. ASIC is committed to improving conduct in the wealth management industry and we will act to remove individuals who do not live up to the high standards expected of financial advisers.
ASIC found that in providing advice Mr Atkins had failed to act in the best interests of four clients. ASIC was not satisfied that Mr Atkins:
- had identified the subject matter of the advice
- conducted a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that would reasonably be considered as relevant to advice on that subject matter
- understood what was required of him to comply with the best interest duty.
This banning should serve to remind financial advisers of Regulatory Guide 175 Licensing: Financial product advisers – conduct and disclosure (RG 175) which includes guidance on complying with the best interest duty and satisfying the ‘safe harbour’. In particular ASIC highlights the following elements of the ‘safe harbour’, which are relevant even when a client expresses a specific preference for a particular strategy or financial product;
- identification of the subject matter of the advice sought by the client (whether explicitly or implicitly); and
- if it would be reasonable to consider recommending a financial product:
- conduct a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client that would reasonably be considered relevant to advice on that subject matter; and
- assess the information gathered in the investigation.
Mr Atkins has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.