Adviser dishonestly borrowing from client SMSFs leads to permanent ban

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Dishonestly borrowing money from the SMSFs of clients has led to a former financial adviser being permanently banned from the industry.

ASIC announced that it has permanently banned Robert Shane Michael from providing financial services, after finding he dishonestly borrowed money from clients’ SMSFs and used the money for personal expenses.

“ASIC’s investigation found that between April 2012 and September 2018, Mr Michael had engaged in dishonest and misleading and deceptive conduct by procuring loans from four of his clients’ SMSF accounts totalling $204,000,” said a statement by the regulator.

According to ASIC the money was spent on personal expenses, including “staving off bankruptcy”, private school fees, and gambling.

ASIC says it also found Michael had failed to disclose commissions on investments he recommended, recommended investments without disclosing a conflict of interest, failed to put the interest of his clients ahead of his own, “engaged in unlicensed financial advice beyond the cessation of his authorisation as a financial adviser”, and failed to provide Statements of Advice, Product Disclosure Statements and Fee Disclosure Statements.

“On 26 July 2019, ASIC found that Mr Michael had breached financial services laws and was not of good fame and character.”

“ASIC expects financial advisers to comply with the law and adhere to ethical standards when providing financial product advice to consumers.  Financial advisers have an obligation to provide clients with a statement of advice (where one is required) before implementing the advice on their behalf.  They are required to keep proper records.”

The ban is recorded on ASIC’s Financial Advisers Register.

ASIC notes that he has the right to appeal to the Administrative Appeals Tribunal for a review of the banning decision.

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