The Australian Federal Court has ordered RI Advice Group to pay a A$6m (£3.2m, $4.3m, €3.8m) penalty.
This is for “failing to take reasonable steps” to ensure that its authorised representative John Doyle “provided appropriate financial advice, acted in his clients’ best interests and put clients’ interests ahead of his own”, the Australian Securities and Investments Commission (Asic) said.
Doyle, a former financial adviser and authorised representative of RI Advice, was ordered to pay an $80,000 penalty after he “inappropriately advised clients to invest, and stay invested, in complex structured financial products”, Asic added.
Doyle received upfront and ongoing commissions for each of his clients’ investments in the structured products. Doyle had admitted the allegations against him.
Sarah Court, Asic deputy chair, said: “These complex products were not suitable for Mr Doyle’s clients, many of whom were approaching retirement. RI Advice should have been properly monitoring Mr Doyle’s advice to ensure he was complying with the law.
“The A$6m penalty handed down by the court against RI Advice sends a strong message to financial services licensees to properly monitor the advice given by their advisers to make sure consumers are protected.”
Case
Justice Moshinsky of the Federal Court found that RI Advice “did not have adequate processes to identify when advisers were avoiding internal advice quality checks or were recommending non-approved financial products”.
Although RI Advice’s conduct was not deliberate and it had paid compensation to Doyle’s clients, the court said its “breaches of the law were serious and sustained and the monitoring flaws should have been apparent to RI Advice”, Asic added.
The court also found RI Advice failed in their obligations as a financial services licensee.
RI Advice was, until its acquisition by IOOF in 2018, an ANZ financial advice business. Doyle was an authorised representative of RI Advice between May 2013 and June 2016, when RI Advice was owned by ANZ Banking Group.
