AFSL hit with $11m penalty over conflicted remuneration

A financial planning licensee has been hit with a $11,030,000 Federal Court penalty after it was found to have breached conflicted remuneration rules and its advisers provided inappropriate ‘cookie cutter’ advice.

ASIC said that DOD Bookkeeping which is in liquidation previously trading as Equiti Financial Services Pty had been the subject of the penalty following the regulator initiating action.

Equity FS paid $130,250 in bonuses to three financial advisers who provided template advice to clients to roll over their super into self-managed super funds (SMSFs) and use those funds to buy property through a related entity, Equiti Property Pty Ltd.

The Court found that in the case of 12 clients who gave evidence to the Court, the advice provided was “cookie cutter” and failed to take into account each client’s individual circumstances or objectives.

The Court also found that the bonuses paid to the three advisers, which were paid when the clients settled on property offered through Equiti Property, influenced the advice they provided and breached conflicted remuneration laws.

Commenting on the outcome, ASIC Deputy Chair Sarah Court said, “Misconduct exploiting superannuation savings is an ASIC enforcement priority. In this case the Court found bonuses paid to advisors influenced the advice they provided, resulting in poor financial outcomes for the consumers involved. Financial services licensees who employ advisers to provide personal financial advice need to ensure that they place their clients at the forefront.

“The size of today’s penalty demonstrates the seriousness of this misconduct.”

In his judgments, Justice Goodman observed that “little or no heed was paid to the particular circumstances of the clients”, with clients not being given sufficient time to understand the advice given to them and advice being focussed on “manoeuvring the clients into property purchases through SMSFs”.

His Honour said, “The contravening conduct was plainly deliberate and extended over a period of several years”.

ASIC cancelled Equiti FS’s Australian financial services licence on 7 November 2024.