RI Advice found liable for RC 'case study' adviser
RI Advice has been found liable by the Federal Court for failing to supervise Royal Commission case study John Doyle.
The firm was found to have failed to take reasonable steps to ensure that its former financial adviser had provided appropriate advice to clients, acted in the clients’ best interests, and put the clients’ interests ahead of his own.
The Court found RI Advice, an Australian financial services licensee, did not have any adequate processes to identify when advisers were avoiding advice quality checks or recommending non-approved financial products.
The Court said these were serious flaws which should have been apparent to RI Advice and found RI Advice failed in their obligations as a financial services licensee.
The conduct of both RI Advice and Doyle was examined in a case study on ‘Bad Advice’ as part of the Royal Commission.
The Australian Securities and Investments Commission (ASIC) commenced proceedings against RI Advice and Doyle in October 2019, and sought declarations of contravention, compliance orders and penalties.
The Court had previously made declarations that Doyle had breached his best interests’ obligations by giving inappropriate advice and failing to put his clients’ interests first when he was an authorised representative (AR) of RI Advice.
Doyle was an AR of RI Advice between May 2013 and June 2016 when RI Advice was owned by ANZ Banking Group, which was now owned by IOOF Holdings.
Sarah Court, ASIC deputy chair, said financial advice licensees needed to understand that they could be liable if their advisers did not act in the best interests of their clients.
“ASIC commenced this proceeding because of the harm caused to investors when advice is not appropriate.
“In some cases, Mr Doyle’s clients were retired, or approaching retirement. Licensees need to have proper systems and processes in place to monitor the advice given by advisers to make sure consumers are protected.”
The penalty hearing for RI Advice and Doyle had not been set and a case management hearing would be listed for a later date.
Recommended for you
It can be extremely hard to realise the gains from financial advice M&A, according to Peloton Partners’ Rob Jones, and more could be gained from firms looking inward at their own practice.
With platforms reporting their quarterly results, there is a clear divide in the adviser markets they are targeting, according to platform specialist Recep Peker, and which would be right for your clients.
The Federal Court has imposed a $10 million penalty on Macquarie Bank for failing to prevent and control unauthorised fee transactions by third parties including financial advisers.
A financial advice firm has seen a weekly decline of 10 advisers, with all moving to a new licensee, while Centrepoint Alliance continues its “growth story”.
