Complaints to the Australian Financial Complaints Authority (AFCA) regarding United Global Capital (UGC) have quadrupled since August.
UGC and the associated Global Capital Property Fund (GCPF) was wound up by the Federal Court in Victoria on 3 October as its affairs were in an “unsatisfactory state”.
Among reasons given for the wind up were a justifiable lack of confidence in the conduct and management of GCPF’s affairs and a risk to the public interest that warrants protection.
GCPF is an unlisted public company, which was incorporated on 15 August 2019, with 538 shareholders, from whom it raised around $85 million in share capital. It was run by directors Joel Hewish, Brett Dickinson and Chris Pappas, although Hewish has since resigned as he received a banning order from ASIC. Hewish was also the sole director of UGC, which had its AFSL cancelled on 31 May 2024.
In its submission to the Senate economics references committee’s inquiry into wealth management companies, it stated it has received 129 complaints about UGC. This figure compares to 31 complaints at the start of August.
The volume of complaints regarding UGC is highly likely to increase further as ASIC has ordered the firm to retain AFCA membership until 31 May 2025 to allow consumers to make complaints.
“Issue relates to the conduct of the firm when recommending retail clients to set up self-managed superannuation funds to invest in related-entity funds. This includes recommending its clients invest in the related property investment company GCPF,” AFCA said.
It has also stated there is “no certainty” that UGC will comply with any AFCA order to pay compensation which means it is likely to need to fall to the Compensation Scheme of Last Resort.
The rising complaints volume has also led to comparisons with Dixon Advisory, which ended up receiving over 2,700 complaints before its AFCA membership was cancelled.
Problems at UGC include:
- Used a client onboarding process that lured people into investing their retirement savings in UGC-related products by having calls made to prospective clients using details, including those obtained from a third-party website operator, offering them a free superannuation “health check”.
- Through its authorised representatives, it recommended investments to clients that included speculative investments in Global Capital Property Fund Limited in which director Joel James Hewish had an interest.
Attempted to contract out of its personal advice obligations whereas its representatives did give personal advice to clients in breach of those obligations, including by failing to act in clients’ best interests and giving them inappropriate advice. - Contravened a number of its general obligations as an AFS licensee, including the obligation to do all things necessary to ensure the financial services authorised under its licence are provided efficiently, honestly and fairly; the obligation to take reasonable steps to ensure its representatives comply with financial services laws; and the obligation to have adequate arrangements in place to manage conflicts of interest.
