Former Infocus adviser enters ASIC enforceable undertaking

A former Infocus Securities Australia financial adviser has entered into an enforceable undertaking with the Australian Securities and Investments Commission (ASIC) after recommending that low-income earning clients invest in agribusiness managed investment schemes — one among several other recommendations that failed to take heed of clients’ personal circumstances.

Danielle Marie Russell was an Infocus authorised representative in Northbridge, Western Australia, between 31 July and 26 November, 2008. ASIC stated that its investigation, which followed a report made to it by Infocus, revealed that Russell had failed to make an adequate determination of and make reasonable inquiries into the relevant personal circumstances of clients who she made recommendations to regarding financial products.

ASIC found that she had recommended low-income earning clients invest in agribusiness managed investment schemes when they did not require a tax-effective investment; and that retail clients invest in “a significant proportion” of higher risk products, which in some cases ASIC noted was in breach of Infocus policy. The investigation also found that Russell had recommended gearing through margin lending accounts in circumstances where no adequate cash flow analysis was undertaken to find out whether the clients could service the loan. She had also failed to actively monitor her clients’ portfolios on an ongoing basis, and she switched clients’ holdings in shares to cash without their permission, ASIC stated.

Russell agreed to complete further education specified by ASIC, and on re-entering the industry agree to supervision by a senior financial planner for 12 months.