ASIC limits operation of Melbourne-based financial services business Yes FS

ASIC has obtained an order which requires financial services business “Yes FS” to change how it deals with its clients until the trial of proceedings for alleged breaches of the Corporations Act and ASIC Act, including breaches of the ‘best interests’ obligation.

The Federal Court made the order against three entities operating as the “Yes FS” business, namely:

  • Wealth and Risk Management Pty Ltd (WRM), the holder of an Australian financial services licensee (AFS licensee);
  • Jeca Holdings Pty Limited (which trades as Yes FS and does not hold an AFS licence); and
  • Yes FP Pty Ltd (which is a representative of WRM).

The Court made the order on the basis that there was an ‘appreciable risk’ that WRM would not prevent breaches of the ‘best interests’ obligation of the Corporations Act by its representatives and that the Yes FS business would breach the obligation not to operate a financial services license without an AFS licence.

The order prohibits:

  • the Yes FS business from making, offering or promoting cash payments to prospective clients in connection with the provision of financial advice in relation to superannuation or the purchase of insurance products;
  • the promotion of such payments on the internet; and
  • Jeca Holdings Pty Ltd from carrying on a financial services business.

The order is in place from 3pm on 8 May 2017 until the start of the trial on 2 October 2017.

At trial, ASIC will seek declarations of contraventions which include that WRM has breached its obligations to ensure that its representatives comply with their ‘best interests’ obligation and provide appropriate advice to their clients, and that the Yes FS business has engaged in misleading and deceptive conduct.

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