A financial services company which allegedly tied loans to the provision of financial advice has been issued with injunctive orders restraining it from engaging in several business activities, including providing financial advice or carrying on a financial services business, by the Federal Court of Australia.
The Australian Securities and Investments Commission (ASIC) commenced proceedings against Financial Circle in the Federal Court last month. The regulator sought injunctive relief, declarations of contraventions and financial penalties following allegations of misleading, deceptive and unconscionable conduct.
ASIC alleged that Financial Circle’s loans required consumers to obtain and implement financial advice, which recommended they purchase personal insurance products and switching superannuation providers.
Significant fees would be paid to Financial Circle from the consumer’s superannuation and in commissions from the insurers when the advice was implemented.
Following a contested hearing on 22 December, 2017, Financial Circle undertook that until 10 January, 2018 it would not carry on a financial services business, provide financial product advice or deal in financial products, enter into credit contracts as a credit provider, or promote, advertise or offer loans or cash payments to prospective retail clients.
The Court ordered on 10 January, 2018 that Financial Circle could not engage in any of the above activities until the final hearing of the matter.
These interim injunctive orders were made on the basis that there was an “appreciable risk” of future contraventions by Financial Circle of the laws relied on by ASIC in the proceedings.