The Federal Court has imposed almost $9 million in penalties on a financial services and credit business.
The firm, Financial Circle, was offering personal loans to consumers of up to $5,000 if they received and implemented financial advice.
“The advice typically recommended purchasing personal insurance products and switching superannuation providers,” said ASIC.
“When consumers implemented the advice, significant advice fees were paid to Financial Circle directly from the consumer’s superannuation. Financial Circle also received ongoing commission payments from the insurers. This process often resulted in a substantial erosion – in many cases up to 30% – of the client’s superannuation balances.”
According to ASIC, the Federal Court found that Financial Circle had made false and misleading representations and engaged in misleading and deceptive conduct, engaged in unconscionable conduct, breached AFSL obligations – including acting in the clients’ best interest – and engaged in credit activity without a licence.
The Court imposed penalties of $8,980,000, and also ordered that the company be permanently restrained from carrying on a financial services business or providing credit or entering into credit contracts as a credit provider.
The company is also required to pay ASIC’s costs.
ASIC had obtained interim orders from the Federal Court in January 2018 – ahead of the court case – preventing the company from carrying on a financial services business, providing financial advice or entering into credit contracts .