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16-149MR ASIC accepts enforceable undertaking from Ascentiv Group Pty Ltd relating to SMSF advice
ASIC has accepted an enforceable undertaking (EU) from Ascentiv Group Pty Ltd (Ascentiv), based in Mascot, New South Wales, and its sole director, Mr Chris Pappas.
An ASIC surveillance of Ascentiv, the holder of an Australian financial services (AFS) licence, identified concerns about the appropriateness of Ascentiv's advice to clients to establish or use a self-managed superannuation fund (SMSF).
In particular, ASIC had concerns about Ascentiv's failure to:
- ensure its representatives provide SMSF advice that was appropriate and in the best interests of their clients
- adequately manage conflicts of interest
- adequately monitor and supervise its representatives, and
- ensure its representatives were adequately trained and competent to provide SMSF advice.
ASIC's surveillance also found that Ascentiv failed to provide its clients with clear and concise statements of advice. Instead the statements of advice were very lengthy and difficult to understand, making it difficult for Ascentiv's clients to make informed decisions about the advice provided to them.
Under the EU, Ascentiv has agreed to cancel its AFS licence and write to some of its existing clients to inform them of the EU and the clients' rights to dispute resolution.
Mr Pappas has also undertaken to:
- give a copy of the EU to any AFS licensee that authorises him to provide financial services in the future;
- complete further SMSF specialist training before becoming a representative of an AFS licensee; and
- refrain from becoming an AFS licensee or office holder of an AFS licensee for two years.
ASIC Deputy Chairman, Peter Kell said, 'Self-managed super funds are not appropriate for everyone. It is important that the advice provided to clients of financial advisers is appropriate for those individuals' needs and circumstances'.
'ASIC further expects that AFS licensees that provide SMSF advice to adequately monitor their representatives and have processes which lead to the provision of high quality SMSF advice. ASIC will intervene where it finds the quality of advice provided by advisers and the supervision of those advisers by the licensee to be lacking', Mr Kell said.
ASIC acknowledges Ascentiv and Mr Pappas' cooperation throughout the process.
ASIC released two information sheets to improve the quality of advice provided by advisers on SMSFs: Information Sheet 205Advice on self-managed superannuation funds: Disclosure of risks (INFO
205) and Information Sheet 206 Advice on self-managed superannuation funds: Disclosure of costs (INFO 206).
In 2012, in response to the growth in SMSFs, ASIC established the SMSF Taskforce. The Taskforce continues to examine high-risk and emerging SMSF issues such as property spruiking to SMSFs, unlicensed conduct and false and misleading advertising of SMSFs.
SMSF's continue to be a strong focus of ASIC's enforcement work. Recent actions include:
- Mr Barry Patrick pleaded guilty to six charges of carrying on a financial services business without a licence and obtaining property and a financial advantage by deception, relating to advice to investors to refinance their homes and/or establish self-managed superannuation funds (SMSF) and then invest their SMSF in property (refer 16-138MR);
- Mr George John Nowak was charged with thirty one counts of deception and one count of dishonest dealings with documents relating to his conduct in dealing with members of SMSFs) who were undertaking property purchases offered by companies of which he was a director, including EJ Property Developments Pty Ltd (refer 16-135MR);
- ASIC accepted an enforceable undertaking (EU) from CMH Financial Group Pty Ltd and the sole director, Daniel White, after an ASIC surveillance found CMH had failed to provide advice about self-managed superannuation funds that was appropriate and in the best interests of clients (refer 16-097MR);
- Ms Sarah Jane Busteed was charged with three counts of dishonestly obtaining a financial advantage by deception and one count of dealing with over $100,000 that was the proceeds of crime (refer: 16-040MR);
- Superannuation Warehouse Australia Pty Ltd was ordered to pay a penalty of $25,000 for false and misleading “Free SMSF Setup” advertising (refer: 15-332MR);
- The Supreme Court of NSW found Park Trent Properties Group Pty Ltd had been unlawfully carrying on a financial services business for over five years by providing advice to clients to purchase investment properties through a SMSF (refer: 15-300MR);
- Dixon Advisory Group Limited complied with two ASIC infringement notices, paying two $10,200 penalties after including potentially misleading claims on its website (refer: 15-207MR);
- The credit licence of Queensland-based Smithson & Baye was cancelled following an investigation into a property and SMSF promoting group (refer: 15-228MR);
- Omniwealth Services paid a $10,200 penalty for potentially misleading claims on its website (refer: 15-190MR);
- The principal of Sherwin Financial Planners, Bradley Thomas Sherwin, was charged with fraud. The charges relate to the use of SMSFs of former clients of Sherwin Financial Planners (refer: 15-158MR);
- The Federal Court of Australia ruled that Craig Gore and several other parties and financial services businesses, including Queensland-based ActiveSuper and Royale Capital, contravened sections of the Corporations Act or were knowingly concerned in those contraventions. (refer: 15-134MR);
- Australian Financial Planning Solutions Pty Ltd paid $10,200 in penalties for potentially misleading SMSF ads (refer: 15-052MR);
- ASIC banned the founder of the Charterhill Group of Companies, George Nowak, from providing financial services until 3 July 2017 on the basis that Mr Nowak is an undischarged bankrupt (refer: 15-048MR);
- Interprac Financial Planning agreed to address ASIC concerns relating to advice provided to some clients about SMSFs (refer: 14-258MR);
- Sentry Financial Services agreed to address ASIC concerns about SMSF advice provided to clients (refer: 14-109MR);
- SuperHelp Australia paid a $10,200 penalty after making potentially misleading statements about the cost of setting up SMSF (refer: 14-051MR);
- Media Super paid $10,200 in penalties for potentially misleading SMSF ads (refer: 14-001MR);
- Spring Financial Group entered into an enforceable undertaking following ASIC concerns about the level of monitoring and supervision of its representatives (refer: 13-263MR);
- Anne Street Partners agreed to engage an independent expert following ASIC concerns about SMSF advice provided to clients (refer: 13-248MR); and
- publishing Report 337 Improving the quality of advice given to SMSF investors. (refer: 13-081MR).