ASIC commenced court action in the Federal Court today against RI Advice Group Pty Ltd (RI Advice) and a former financial adviser, John Doyle. RI Advice was, until its recent acquisition by IOOF, an ANZ financial advice business.
ASIC is alleging that RI Advice failed to take reasonable steps to ensure that Mr Doyle provided appropriate advice, acted in clients' best interests and put his clients' interests ahead of his own, as required by law. Mr Doyle was an authorised representative of RI Advice between May 2013 and June 2016.
ASIC is also taking action against Mr 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.
The impacted clients were, in some cases, preparing for retirement. ASIC alleges that Mr 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 Mr 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. For Mr Doyle, the maximum civil penalty is $200,000 per contravention.
The conduct of both RI Advice and Mr Doyle was examined as a case study on 'Bad Advice' as part of the Financial Services Royal Commission (Interim Report, 4.2.1 Mr Doyle).
