ASIC has taken civil penalty action against RI Advice and former Melbourne financial adviser, John Doyle.
The conduct of both RI Advice and Doyle was examined as a case study on ‘Bad Advice’ as part of the Financial Services Royal Commission.
ASIC commenced court action in the Federal Court on 31 October against Doyle and RI Advice, which was an ANZ financial advice business until its recent acquisition by IOOF. Doyle was an authorised representative of RI Advice between May 2013 and June 2016.
ASIC is alleging that RI Advice failed to take reasonable steps to ensure that Doyle provided appropriate advice, acted in clients’ best interests and put his clients’ interests ahead of his own, as required by law.
ASIC is also taking action against Doyle, alleging that he gave inappropriate “cookie cutter” advice to retail clients to invest in complex structured financial products called Macquarie Flexi 100 Trust and Instreet Masti 36 and 38, without taking into account their financial goals or risk tolerance.
“…some of the impacted clients were preparing for retirement.”
ASIC stated that some of the impacted clients were preparing for retirement. The regulator alleges that Doyle received upfront and ongoing commissions for each of his clients’ investments in the structured products.
ASIC alleges RI Advice knew, or should have known, that there was substantial risk Doyle was not complying with his obligations under the law and was repeatedly recommending structured products to his clients, bypassing compliance processes. ASIC further alleges RI Advice did not take reasonable steps in response.
ASIC also claims RI Advice contravened general obligations as an Australian Financial Services Licence holder and is seeking compliance orders from the Federal Court to prevent similar contraventions occurring in the future.
The maximum civil penalty for contraventions alleged against RI Advice is $1 million per contravention and for Doyle, the maximum civil penalty is $200,000 per contravention.