The Australian Securities and Investments Commission (Asic) has started Federal Court action against New South Wales-based RI Advice Group and former financial adviser John Doyle.
The conduct of both RI Advice and Doyle was examined as a case study on “bad advice” as part of the Financial Services Royal Commission.
Asic has alleged that the firm failed to take reasonable steps to ensure that Doyle provided appropriate advice, acted in clients’ best interests and put his clients’ interests ahead of his own.
The Aussie regulator is also taking action against Doyle, who was an authorised representative of RI Advice between May 2013 and June 2016.
It alleges that he gave inappropriate “cookie cutter” advice to retail clients to invest in structured “complex” financial products called Macquarie Flexi 100 Trust and Instreet Masti 36 and 38, “without taking into account their financial goals or risk tolerance”.
Non-compliant
Asic alleges that Doyle received upfront and ongoing commissions for each of his clients’ investments in the structured products.
The watchdog also claims RI Advice knew, or should have known, that there was substantial risk Doyle was being non-compliant and was repeatedly recommending structured products to his clients, bypassing established in-house processes.
It said that RI Advice “did not take reasonable steps in response” and the firm “contravened general obligations” as an Australian Financial Services Licence holder.
Penalties
Asic has, therefore, turned to the Federal Court to prevent similar contraventions occurring in the future.
The maximum civil penalty for violations alleged against RI Advice is A$1m (£533,000, $690,000, €618,000) per infringement.
For Doyle, the maximum civil penalty is A$200,000 per contravention.
RI advice was an Australia and New Zealand Banking Group entity before being acquired by IOOF Holdings.
