Failing best interest duty for SMSFs leads to 5 year ban

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ASIC has banned a Perth-based financial adviser from providing financial services for five years for failing to meet the best interest duty when advising on SMSFs.

ASIC announced that it had banned Wayne Blazejczyk from providing financial services for five years, following surveillance of advice he gave while an authorised representative, along with responsible manager and director, of Ballast Financial Management Pty Ltd.

The regulator found that Blazejczyk had advised his clients to set up SMSFs with “low” superannuation balances, exposing them to “financial harm because the ongoing SMSF costs were higher than the costs of their existing superannuation fund”.

“For many retail clients with balances under $500,000, setting up an SMSF may not improve their position when compared to using an APRA-regulated superannuation fund.”

ASIC also found that Blazejczyk failed to make reasonable inquiries about his clients’ personal circumstances or reasonable investigations of alternative products. Instead Blazejczyk recommended starting SMSFs and investing in the Bateau Global Opportunities Fund, while he was the “ultimate owner and beneficiary of the SMSF administration service he recommended and the investment manager of Bateau Global Opportunities Fund”.

ASIC says that Blazejczyk failed to disclose his interests in related entities, along with associated benefits and remuneration he would receive as a result of implementing his advice. ASIC found that the had “failed to prioritise his clients’ interests before his own”.

“ASIC expects financial advisers to take reasonable steps to identify and consider their clients’ personal circumstances when providing personal advice. Advisers have a legal obligation to prioritise their clients’ interests and to comply with the best interests duty when providing personal advice.”

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

Four year ban over insurance advice

ASIC also announced that it had banned a NSW-based financial adviser, David O’Brien, from providing financial services for four years.

O’Brien had most recently been an authorised representative of NAB-owned GWM Adviser Services Limited, and had been with AMP-owned Charter Financial Planning Limited.

Reviewing a sample of the advice files, ASIC found that O’Brien had failed to make sufficient inquires into the circumstances of his clients, to conduct reasonable investigations of their existing financial products, or to provide advice based on their personal circumstances.

When providing advice on superannuation, O’Brien “made no inquiries into matters such as costs, investment strategy, or whether his clients already had any insurance in place within their existing superannuation arrangements,” ASIC said.

“One of Mr O’Brien’s clients had their cover declined for pre-existing medical conditions after their existing insurance had been cancelled, leaving them uninsured.”

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

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