May 17, 2018
ASIC has cancelled the Australian financial services licence of a Melbourne based business which had been found to be offering advice linked to life insurance that breached obligations to act in the best interests of clients.
The regulator cancelled the licence of Wealth & Risk Management (WRM), effective from 14 May 2018, after a hearing in February 2018 in the Federal Court of Australia found it had breached numerous financial services laws and obligations.
The Court ordered WRM be restrained from carrying on a financial services business for 18 years and also ordered that a director of the firm pay a $650,000 penalty and be restrained from providing financial services for 10 years.(see: Advice Businesses Hit with $7m Fine for Misconduct).
ASIC stated that since WRM had ceased to carry on its financial services business the regulator had cancelled its licence, first issued in March 2013, under the provisions of the Corporations Act which allow it to cancel licences of business that cease to operate.
WRM initially came to the attention of ASIC alongside two other businesses – Yes FP and Yes FS – and ASIC claimed, in March 2017, that via a referral arrangements between WRM and Yes FS, consumers approaching the latter for a cash loan had to agree to receive financial advice from WRM and replace their existing superannuation fund with one recommended by WRM.
Applicants also had to purchase Life, TPD and/or Income Protection insurance policies and agree to a fee for advice, and the insurance premiums, being charged to the superannuation fund leading ASIC to claim this arrangement was a breach of best interest duties (see: ASIC to Claim Licensee Breached Best Interest Duty).