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ASIC seeks civil penalties against Equiti FS based on remuneration breaches



The Australian Securities and Investments Commission has recently announced the commencement of civil penalty proceedings against the establishment formerly known as Equiti Financial Services Pty Ltd. Now known as DOD Bookkeeping Pty Ltd, the company finds itself facing proceedings in the Federal Court following allegations of regulatory breaches. ASIC has suggested that the company unlawfully breached regulatory prohibitions against conflicted remuneration, having failed to offer up suitable financial expertise or follow its best interests protocol when it came to the financial advice distributed to particular clients.

At the time a part of Equiti Group, Equiti FS offered its clients services in mortgage broking and real estate via Equiti Finance Pty Ltd and Equiti Property Pty Ltd respectively, as well as the establishment and administration of self-managed superannuation funds in its own right.

Allegations have now been shared by the regulator which suggests that between 26 October 2015 and 27 August 2018, Equiti FS paid bonuses to three advisors which totalled around $164,750 upon the settlement of any property purchases said advisers had advised their clients to go through with via either an already established SMSF or an SMSF yet to be created. These bonuses, it is claimed, related to purchases that had been orchestrated by Equiti Property.

ASIC

Referring to the Corporations Act 2001, ASIC also alleges that the aforementioned bonus payments were a breach of the prohibition of conflicted remuneration. This is said because the bonuses could, on obvious grounds, be an influencing factor in the financial product advice given by the advisors. The bonuses could have similarly influenced the choice of financial product recommended to retail clients.

Equiti FS has also been accused of breaching the Corporations Act during a time when its advisers provided financial advice against the clients’ best interest; between 18 May 2015 and 13 February 2018, there were 12 reported occasions in which the financial expertise provided to customers were inappropriate in terms of their specific needs. Each of the 12 cases of allegedly inappropriate advice contained recommendations for clients to establish an SMSF, to go on to purchase a property via the SMSF, and even borrow resources to follow the advice.

Last week, ASIC banned Robert Patrick Marie, former managing director of Theta Asset Management Ltd (currently in liquidation), from providing any financial services for four years. The regulator also banned Marie from controlling financial services entities or being involved in any financial service business.

ASIC recently issued a warning against limestonefx.com. The regulator alerted investors about the suspicious site as it falsely claims it is associated with Limestone FX Pty Ltd, an authorised representative of Baileyhenry Capital Group Pty Limited, which holds an Australian financial services (AFS) license.


Editor’s note: Equiti FS in Australia has no affiliation or connection whatsoever to online trading firm Equiti Group.

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ASIC seeks civil penalties against Equiti FS based on remuneration breaches

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