The Administrative Appeals Tribunal has upheld a decision by ASIC to ban a financial adviser from providing financial services for three years, relating to SMSF advice.
ASIC banned Jason Sean Atkins from providing financial services for three years in 2017. ASIC said it had found Mr Atkins had advised clients to set up SMSFs and use Limited Recourse Borrowing Arrangements (LRBAs) to buy property in ways that breached the best interest duty.
The Administrative Appeals Tribunal (AAT) has now upheld the three year ban, following an appeal of ASIC’s decision.
“The detriment and potential loss caused to the Clients is potentially very serious,” said AAT Senior Member Dr Michelle Evans, in the ruling.
“The Applicant facilitated a high risk investment strategy for the Clients whereby all of the Clients were in a worse financial position than if they had done nothing and not followed his advice. The Clients also had ongoing annual and compliance costs as a result of following the Applicant’s advice, which were substantially more than those under their existing superannuation funds.”
“The Clients were also left in the disadvantageous position of having a single property as the sole asset in their superannuation funds, leaving them in a precarious position, for instance: if the market were to drop; if the property were to be un-tenanted; or if the Clients otherwise have cash flow problems, such as in the case of a redundancy.”
Following the ruling by the AAT, ASIC Deputy Chairman Peter Kell said: “Advisers who provide poor advice on SMSFs are putting their clients’ financial futures at risk. Advisers who fail to give compliant advice will be removed from the industry.”
ASIC said the ban should serve as a reminder to financial advisers that they need to conduct a reasonable investigation of financial products that may put their client in a better position, even if the client approached them with an interest in a particular strategy or product.
“The job of financial advisers is to help their clients by providing professional advice that leaves their clients in a better position, not to merely execute their clients’ wishes, especially when those wishes are going to leave their clients in a worse financial position,” said Mr Kell.
ASIC notes that Mr Atkins has the right to appeal the decision to the Federal Court.