ASIC bans Qld adviser and cancels Smart Solutions licensee

ASIC adviser ban ban AFSL

3 February 2020
| By Jassmyn |
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Queensland-based financial adviser, Timothy Shapter has been banned from providing financial services for seven years for failing to comply with best interests duty by the corporate watchdog.

The Australian Securities and Investments Commission (ASIC) has also cancelled the Australian financial services (AFS) licence of Smart Solutions Group which Shapter was a director and an authorised representative of.

ASIC reviewed Shapter’s advice files and found that he provided advice that was not in his clients’ best interests, was not appropriate to his clients, and that gave priority to generating fees for himself over the financial interests of his clients.

Shapter was also found to have provided inappropriate switching advice by recommending that clients switch out of their existing superannuation and insurance products and into higher fee paying products.

“Shapter also used a ‘layered advice’ strategy, whereby he provided his clients with a superannuation statement of advice first, followed by an insurance statement of advice a few weeks later,” ASIC said.

“This process was found to be confusing for clients and, in some cases, resulted in lost insurance or policy exclusions. The review also found that Shapter issued multiple statements of advice and provided inappropriate switching advice to generate fees for himself.”

Most of Shapter’s clients were obtained through a third party referral arrangement engaged by Smart Solutions who cold called potential clients and obtained limited details about their financial circumstances and their risk profiles.

Shapter use this information to prepare his advice documents and usually issues super statements of advice on the same day that the initial client enquiries were made by the third party.

ASIC said Shapter could not have properly enquired about, or considered, his clients’ needs and circumstances during this timeframe.

Smart Solutions’ AFS licence was cancelled as it failed to ensure financial services were provided efficiently, honestly and fairly. It also failed to adequately monitor and supervise its authorised representatives, and maintain competence to provide the financial services covered by its licence.

“For example, Smart Solutions permitted some of its authorised representatives to audit their own advice files. It also provided false information in connection with the anti-money laundering customer verification requirements because it allowed its authorised representatives to falsely declare that they had sighted official identity documents,” it said.

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