Award Winning Practice May Face Criminal Charges

High profile financial adviser, Sam Henderson and his business may be open to criminal charges for failing to meet best interest duty obligations, according to evidence presented to the Banking Royal Commission.

Henderson Maxwell CEO Sam Henderson

As part of the closing remarks at the end of two weeks of hearings related to financial advice, Senior Counsel Assisting the Commission, Rowena Orr QC said, “On the evidence, it is open to the Commissioner to find that Mr Henderson’s conduct in connection with the advice he gave…might amount to misconduct”.

According to Orr, Henderson may have breached his obligations under section 961B of the Corporations Act which required him to act in the best interests of his client.

He may also have breached obligations under section 961G to provide appropriate advice and under section 961J to prioritise his clients interests ahead of his own or that of his business, Henderson Maxwell.

“It was also open to the Commissioner to find that Henderson Maxwell’s conduct in connection with advice Henderson gave…might amount to misconduct,” Orr said.

She added that the firm, which was named as the 2016 AFA Practice of the Year, may have breached section 952E1 of the Corporations Act due to the provision of a defective Financial Services Guide to a client.

Further possible breaches may relate to conduct that fell below community standards in which an employee of Henderson Maxwell impersonated a client on at least five occasions and Henderson’s failure to assist the FPA in the resolution of complaint brought by the client.

Henderson appeared before the Commission after he advised a client, who also appeared before the Commission, to roll a public-sector superannuation fund into a SMSF managed by Henderson Maxwell.

The fund would have been managed at a substantial cost to the client and the roll-over advice would have resulted in a loss of $500,000 for the client as a result of an early withdrawal from the fund.

  • Phil

    First the banks, then the AMP now AFA’s Practice of the Year 2016. I accept the AFA would not have been privy to any such issues at the time. But here I was just last week finally giving some credit to my industry association in its response [to its response] to the Royal Commission. I admit to being openly critical of the AFA for many years – who seemed to do little more than send me emails about ‘Young Adviser…’, ‘Female Adviser…’ ‘Excellence in…’ Awards etc and expensive breakfast session invites and so on and so forth for my $720 a year. At least it’s far more than I get from the TPB for my AR and CAR annual fees! Who now do I go to in our industry who isn’t being directly [or by association] brought to task by all and sundry? I’m just glad I’m 61 and will be in a comfortable position to sit back by the time I get to 65 – leave behind me all this convoluted diatribe. It will be 47 years in 2021 when I can look back on the first 30 and say it was so enjoyable to be able to look after my clients needs ahead of a maze of mainly bureaucratic overkill. The last 17 will have taken the equivalent of 30 years off my life – due to the stress and anxiety it has unnecessarily created for all ethical and creditable advisers like me. R.I.P. our industry, the one I used to know.

    • paulkate72

      Disappointing, Phil. Yes, one wonders whether the product manufacturers and insurers will be effectually penalised for their duplicity in these findings. If advisers were in the spotlight there’s no question that we would have to pay and likely many of us would be bankrupted in the process. On another note, it would be interesting to see what the outcome might be if the same commission terms of reference was conducted into the legal profession. What an eye-opener that would be!

      • Daryl La’ Brooy

        Talking about the legal profession, many years ago a client referred a friend of hers to me for advice. The friend had just won a compensation payment of $300,000 from her employer due to a workplace accident. The negotiation to get the payment had taken a few days. The lawyer had agreed to the payment being made on the grounds of economic loss rather than pain and suffering this led to my client being excluded from the Disability Support Pension for 7 years! She had used the compensation payment to buy a home after renting following a failed marriage. Now she had no income. I went to see the lawyer with my client because she had been charged $39,000 for the legal work and my client wanted to know on what basis. The meeting with the lawyer was the most unprofessional I have ever seen. The lawyer immediately became combative, she raised her voice and started swearing. My client said lets leave, she couldn’t stand the confrontational attitude. Her next step was the Legal Ombudsman’s service but after her injury, divorce, Centrelink issues, she didn’t have the stomach to go any further. Many of my lawyer friends point to their colleagues and tell me there are a lot of unethical operators in their profession as well. My story is just one example I guess.

        • paulkate72

          One of many, Daryl. Can understand that your client doesn’t
          want to take it any further – she’d no doubt had enough. There is much of the
          parasite-like approach of many lawyers in your story and the legal profession
          has certainly had its image tarnished by operators like the one here. Such practitioners often preach ethics, but I’ve
          found that those who do it loudest are least likely to actually practise them.

          Many politicians were lawyers in the private sector, so any
          chance of the legal profession being put in the spotlight is pretty unlikely. Still,
          we genuinely care for our clients and can be proud of that fact even if some of
          us might have to call time on our businesses.

          Thanks for your comments.

          • Daryl La’ Brooy

            I told the various CEO’s of the AFA and the FPA to ask the politicians they met in Canberra whether they had ever seen a financial planner. They tell me they ask this question now. When I saw Phil Kewin in February in Melbourne during the AFA Roadshow I told him he needed to take happy clients with him to his meeting with politicians so they can hear the good news directly from clients. I’ll be saying this to Dante De Gori when I see him in a few weeks in Melbourne for the FPA Roadshow. At the last MDRT Victorian quarterly meeting last week, Brad Issac related his story of helping his quadriplegic client receive $2.3 million after a 3 battle with the life insurance company. Brad related how he spent so much time with this client during the battle for him to be paid. The politicians need to be told of these stories so they are given some context to offset the bad news from the Royal Commission!