Receiving soft benefits from a telemarketing operation about superannuation switching are among breaches that have led to the Financial Services and Credit Panel’s first outcome for 2024.
The relevant provider gave advice to two clients in relation to insurance and superannuation, having been referred them by a third-party superannuation switching cold calling operation, for which they received soft benefits under a commercial agreement.
This operator made unsolicited telemarketing calls to individuals offering them a superannuation review.
The FSCP sitting panel determined the advice given to the clients contravened the Corporations Act as it did not adequately consider the clients’ objectives, needs and financial situation, or base all judgements on their relevant circumstances. Nor was the advice given to the clients appropriate in the circumstances.
The client files did not contain evidence that the clients’ circumstances were such that they either wanted or needed ongoing advice to warrant ongoing fees, rather than paying for future services if the need arose.
The receipt of soft benefits by the relevant provider also meant the sitting panel felt they prioritised their own interests over the clients.
The sitting panel found that the relevant provider gave the clients misleading information that was likely to induce them to apply for the recommended investment product. The relevant provider included in the statements of advice a graph and statement that suggested that the recommended product outperformed other funds for an entire five-year period when the recommended product had only been in existence for one year.
There was no evidence that the clients understood the meaning or significance of “back tested results” as used for the recommended product in the graph.
Therefore, in giving the advice, the relevant provider failed to demonstrate the code of ethics’ values of honesty and fairness, and breached standards three, five and nine of the code of ethics.
As a result, the FSCP sitting panel issued a written direction that the relevant provider received specified supervision, engaged an independent person with expertise in financial laws compliance to pre-vet and audited the next 10 SOAs that include a recommendation in relation to insurance; and the next 10 SOAs that include a recommendation in relation to superannuation, that the relevant provider intended to present to a retail client.
The relevant provider was also required to provide the independent person’s findings as a result of their audit to ASIC, and must bear the cost of the work undertaken.
Thank you Laura, Money Management and FSCP for round 1 against some of the worst criminals in our industry but this will not end because ASIC cannot stop them or willing to go for round 2 to date. We know who they are and we have told product providers loosing FUM (mostly industry funds) and product providers gaining it (plus knowingly) HOWEVER, everyone says they are powerless to stop this. One such Brisbane based scam call centre owned and operated by a US based “business coach” who lives in Bermuda and works with 5 or more self licensed firms has been doing this for over 5 years and claims that they cannot be stopped thereby letting their Australian “partners” to drive around in shiny new red Ferrari’s. Pathetic!
I see that the licensee isn’t named not is it in the asic determination
How are consumers to be aware of such scams if industry doesn’t call them out
Why on earth do these scam merchants get away with a probationary slap on the wrist.
ASIC needs to fully demonstrate that it is an effective cop on the beat.
Has nothing been learned from the 2018 royal commission?