Wealth firm director ordered to pay $400,000
The director of a financial services has been ordered to pay $400,000 to Financial Literacy Australia as part of an enforceable undertaking entered into with the Australian Securities and Investments Commission (ASIC).
The regulator said it had accepted an Enforceable Undertaking from a director of Real Wealth Pty Ltd, David Orth under which he will cease to provide financial services for five years in addition to which he will make a community benefit payment in the amount of $400,000 to Financial Literacy Australia to support the financial capability of vulnerable people.
It said Orth was the director of Real Wealth Pty Ltd, the responsible manager of Professional Representatives Pty Ltd.
ASIC said Orth had agreed that for the next five years:
* he would cease and not provide financial services, whether on his own behalf or on behalf of another person who carries on a financial services business, whether as an employee of that person or otherwise.
* be a director of a financial services company that holds an Australian Financial Services licence, or a company that is a corporate authorised representative of an AFS licensee.
* hold out that he holds an AFS licence,
* and apply for an AFS licence.
ASIC said that between May 2013 and December 2016 Orth developed and caused Real Wealth to implement a business model under which it provided financial services to more than 750 clients on the basis that representatives of Real Wealth would offer to assist clients complete a lost superannuation search and then make representations to them about the advantages of consolidating their existing superannuation funds into a single superannuation fund, and the returns on that fund.
ASIC said Real Wealth did not take into account the personal circumstances of clients or make reasonable inquiries regarding the clients' objectives, financial situation or needs.
Further, it Real Wealth did not conduct a reasonable investigation into alternate financial products which might achieve and meet clients' objectives and needs most – instead often using a single fund that they had a relationship with, HUB24.
“Real Wealth provided a 'general advice' warning but did not provide clients with statements of advice for the financial product advice that Real Wealth provided. Real Wealth charged clients 4.4 per cent of the total balance of their superannuation balances,” the regulator said.
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