ASIC has started Federal Court proceedings against two companies, alleging conflicted remuneration around SMSFs, in what may be the first case of its kind.
The regulator announced that it has commenced civil penalty proceedings against R M Capital Pty Ltd and The SMSF Club Pty Ltd.
“ASIC alleges that SMSF Club advised its clients to set up self-managed superannuation funds (SMSFs) then use their SMSFs to buy real property marketed by a real estate agent, Positive RealEstate Pty Ltd (Positive RealEstate). ASIC asserts that SMSF Club had referral agreements with Positive RealEstate and that RM Capital was aware of this referral agreement,” said a statement by ASIC.
“ASIC contends that, from December 2013 to July 2016, each time an SMSF Club client used their SMSF to buy a property marketed by Positive RealEstate, Positive RealEstate paid around $5,000 to SMSF Club. At times, Positive RealEstate paid these amounts directly to SMSF Club, while at others it paid them to RM Capital who passed on the majority to SMSF Club.”
ASIC alleges that over $730,000 in conflicted remuneration was accepted by The SMSF Club.
The regulator describes its case as being that the payments could reasonably be expected to have influenced financial product advice given by The SMSF Club, and so would be conflicted remuneration under the Corporations Act.
“ASIC also alleges that RM Capital was aware of the payments and did not take reasonable steps to stop the SMSF Club from accepting them. ASIC contends that as the authorising licensee for SMSF Club, RM Capital’s failure to take reasonable steps to ensure SMSF Club’s compliance also breached the law.”
“ASIC will contend that SMSF Club and RM Capital contravened the Act on as many as 259 occasions each. Each contravention attracts a potential civil penalty of up to $1 million.”
ASIC is seeking declarations of contravention, civil penalties and compliance orders against The SMSF Club and RM Capital.
According to ASIC, this would be the first court case concerning the alleged breach of the conflicted remuneration provisions.