Adviser Pamela Anderson sees two-year ban upheld by AAT

A Victorian financial adviser, Pamela Anderson, has seen her two-year ban from providing financial services for two years affirmed by the Administrative Appeals Tribunal (AAT).

During the misconduct between May 2016 and October 2017, Anderson was authorised by The Financiallink Group Pty Ltd which is now Nextgen Financial Group and provided personal advice to retail clients through her practice, Anderson Lutgens & Co Pty Ltd trading as Beyond iWealth.

During the time, Anderson recommended her clients in a high-risk fund called Investport Income Opportunity Fund (IIOF). The trustee of IIOF was Endeavour Securities, part of Linchpin Capital which was led by Peter Daly.

“Linchpin was the trustee of the Investport Income Opportunity Fund, a managed investment scheme. The IIOF was operated by Endeavour. The IIOF substantially gave rise to ASIC’s concerns in the relevant period. Endeavour, Linchpin and Financiallink, companies in the Linchpin group, are said to have had common directors in Peter Daly and Paul Nielsen," the AAT said.

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"The applicant acknowledged in cross-examination that the IIOF was not a low-risk investment. She agreed it had the potential to be volatile in terms of its returns. She initially did not agree that it was an inappropriate investment for persons who would require return of their money in the short term. As I understand her evidence, she relied on Daly and Nielsen, who gave her some sort of “oral guarantee” that investments could be withdrawn on relatively short notice. What she was told, however, and perhaps passed on to her clients, was not what the PDS revealed."

Linchpin collapsed in 2018 and Daly was banned in November 2019 from providing financial services for five years, alongside former directors Paul Raftery and Ian Williams, for failing to act in the best interest of investors in managed investment schemes under their control.

In August 2021, Anderson was banned by ASIC from providing financial services for two years, from carrying on of a financial services business (including as an officer, manager, employee, contractor or in some other capacity), managing, supervising or auditing the provision of financial services, and the provision of training about financial services or financial products.

Anderson appealed the decision but it was upheld by the Administrative Appeals Tribunal (AAT) on 17 November. 

The AAT affirmed ASIC’s findings that Anderson:

• Failed to act in the best interests of her clients, and to provide appropriate advice by not taking into consideration her clients’ preferences for ethical investments;
• Failed to prioritise her clients’ interests by advising them to invest in IIOF in circumstances where the applicant knew, or ought to have known, that there was a conflict between the interests of the clients and her own interests as the recipient of loans from IIOF; 
• Gave non-compliant statements of advice to clients and failed to provide additional disclosure regarding the costs and benefits lost as a result of switching from one product to another.

The AAT found Anderson failed to comply with these duties when giving advice to other clients to invest in the IIOF and when providing advice to establish and invest in or through a self-managed super fund.

The AAT accepted ASIC’s submissions that Anderson was under independent and distinct obligations than those owed by her licensee to comply with her professional obligations and that her conduct was not excused or explained away by a reliance on the instructions, procedures, or process of her then licensee. 

Further, the AAT accepted ASIC’s submission that had Anderson acted consistently with her obligations as an advisor, virtually none of her clients would ever have been advised to invest in the IIOF, or have invested in it, and they would not have been affected by the collapse of the IIOF.

Without these mitigating factors, the AAT said the ban could have been four years.

ASIC said she has 28 days to appeal the AAT’s decision to the Federal Court.