Four year ban for advising “almost all” clients to borrow in SMSFs

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ASIC has handed down a four year ban from the financial services industry, after finding a former financial adviser told “almost all” his clients to borrow in an SMSF to buy property.

ASIC announced that it is has banned Adrian Khaw from providing financial services for four years, based on surveillance of his activities as an authorised representative of Apogee Financial Planning Limited (owned by NAB) and the ANZ.

According to the regulator, a review of advice files found Khaw’s clients were referred to him by an associate mortgage broking business as they wanted to purchase an investment property. But, despite their individual circumstances, Khaw advised “almost all” his clients to borrow through a new or existing SMSF using a Limited Recourse Borrowing Arrangement (LRBA) to purchase the property.

“ASIC found that Mr Khaw failed in his duty as a financial adviser to put in place a strategy that was in the client’s best interests. Mr Khaw failed to provide a professional, independent assessment of whether an SMSF, which borrowed to invest in property, was an appropriate strategy for his clients. ASIC found that Mr Khaw put his own interests ahead of the interests of his clients and that his advice exposed a number of his clients to financial harm,” said ASIC.

“ASIC also found that Mr Khaw was not adequately trained, or competent, to provide financial services and that he engaged in misleading conduct by backdating file notes.”

ASIC Commissioner Danielle Press said: “Advisers must take into account their clients’ personal circumstances, needs and financial goals to ensure that the advice they provide is appropriate. Failing to do so clearly indicates a lack of regard for the law and, most importantly, for the interests of clients.”

Khaw has the right to appeal ASIC’s decision to the Administrative Appeals Tribunal.

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