Australian regulator cancels AFS licence of Smart Solutions
ASIC cancelled Smart Solutions’s license due to the firm’s failure to adequately monitor and supervise its authorised representatives, and maintain competence to provide the financial services covered by its licence.
The Australian Securities & Investments Commission (ASIC) today announces that it has banned Queensland-based financial adviser Mr Timothy Shapter from providing financial services for a period of seven years, and cancelled the Australian financial services (AFS) licence of Smart Solutions Group (Aust) Pty Ltd. Mr Shapter was a director and an authorised representative of Smart Solutions.
The regulator has found that Mr Shapter provided advice that was not in his clients’ best interests, was not appropriate to his clients, and that gave priority to generating fees for himself over the financial interests of his clients. The review also revealed 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.
Mr Shapter obtained most of his clients under a referral arrangement with a third party engaged by Smart Solutions. The third party cold called potential clients and obtained limited details about their financial circumstances and their risk profiles. Mr Shapter then used this limited information to prepare his advice documents.
ASIC explains that financial advisers have a legal obligation to act in the best interests of their clients when providing personal advice. This includes taking reasonable steps to understand their clients’ personal circumstances and exploring existing financial products to ensure they are providing appropriate advice that meets their clients’ objectives.
In addition, ASIC has cancelled the AFS licence of Smart Solutions because the licensee failed to ensure that financial services were provided efficiently, honestly and fairly. Moreover, Smart Solutions failed to adequately monitor and supervise its authorised representatives, and maintain competence to provide the financial services covered by its licence.
For example, Smart Solutions permitted some of its authorised representatives to audit their own advice files. 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.
The banning of Mr Shapter and the cancellation of Smart Solutions’ AFS licence are part of ASIC’s ongoing efforts to improve standards across the financial services industry.
Mr Shapter and Smart Solutions have the right to seek a review of ASIC’s decision at the Administrative Appeals Tribunal.
