An Australian financial services (AFS) licencee and its adviser have been penalised by the Australian Securities and Investments Commission (ASIC) for failing to act in the best interest of their clients.
Queensland-based Timothy Shapter, former director and authorised representative of Smart Solutions Group, has been banned from providing financial services for seven years; while the company had its AFS licence cancelled, after an ASIC review of Shapter’s advice files.
“The review found that Mr Shapter provided inappropriate switching advice by recommending that clients switch out of their existing superannuation and insurance products, and into higher fee-paying products,” the corporate watchdog said. “Mr Shapter also used a ‘layered advice’ strategy, whereby he provided his clients with a superannuation statement of advice first, followed by an insurance statement of advice a few weeks later. This process was found to be confusing for clients and, in some cases, resulted in lost insurance or policy exclusions. The review also found that Mr Shapter issued multiple statements of advice and provided inappropriate switching advice to generate fees for himself.”
ASIC said Shapter used the limited details he obtained from a third party engaged by Smart Solutions, to prepare advice documents for most of his clients, without properly enquiring about, or considering, their needs and circumstances, their reasons for wanting advice, or the most suitable options for their circumstances.
Shapter’s employer, Smart Solutions, meanwhile, had its AFS licence cancelled because it failed to ensure financial services were provided efficiently, honestly, and fairly. It also failed to adequately monitor and supervise its staff.
“For example, Smart Solutions permitted some of its authorised representatives to audit their own advice files,” ASIC said. “It also provided false information in connection with the anti-money laundering customer-verification requirements because it allowed its authorised representatives to falsely declare that they had sighted official identity documents.”
Shapter and Smart Solutions have the right to seek a review of ASIC’s decision at the Administrative Appeals Tribunal.
