NSW adviser and practice hit by ASIC double whammy

A New South Wales-based adviser has been banned from providing financial services for five years and has had his business’ Australian financial services (AFS) licence cancelled after several failures to act in the best interests of clients were uncovered.

Concerns about the conduct of Christopher Edward Luff from Build your Wealth were raised with the Australian Securities and Investments Commission (ASIC) regarding financial advice he provided; his management of conflicts of interest; and his involvement in a self-managed superannuation fund (SMSF) investment structure where clients invested in the previously-under-interim-stop-order Storehouse Residential Trust.

ASIC identified a conflict of interest between the Build Your Wealth business and Storehouse, the investment manager behind the Storehouse Trust that had its stop order lifted in September 2023. The corporate regulator also determined that Luff “did not act in the best interest of clients” by recommending that they invest in the trust and handed out inappropriate advice after he:

• limited the scope of the advice; and
• failed to make reasonable enquiries into the client’s relevant financial situation, objectives, needs and goals — therefore failing to base the advice on those circumstances.

“ASIC also found that Mr Luff failed to enquire of his clients as to why they wanted to invest in the Storehouse Trust and that the clients should have been made aware of:

• The risks of investing in the Storehouse Trust;
• The potential risk of losing all their funds with such an investment;
• The risk to the security of their living arrangement; and
• The risks if the Trust did fail.

“The law requires financial advisers to give priority to their client’s interests when giving advice and to provide advice that is appropriate to the client,” ASIC’s statement said.

“In circumstances where ASIC has found that Mr Luff’s advice to clients in relation to the Storehouse Trust was not appropriate or fit for purpose and that there were conflicts of interest of which clients were not informed. Investors with concerns in relation to their investment may wish to seek advice from a new financial adviser.

“ASIC further determined that Build your Wealth failed to ensure that the financial services it provided were done so efficiently, honestly and fairly and that it failed to take reasonable steps to ensure its representatives complied with financial services laws.”

The banning and licence cancellation were in effect from 9 April after which Luff and Build Your Wealth applied to the Administrative Appeals Tribunal (AAT) for a confidentiality order, review and stay of ASIC’s decision.

The banning has now been recorded on ASIC’s Banned and Disqualified register and Financial Advisers Register (FAR) after the interim stay granted to Luff and the business on 30 April was lifted on 24 July.

On 17 July, the AAT rejected Luff’s substantive stay application and confidentiality order request.

Build Your Wealth’s AFSL first commenced in September 2020 and ceased in December 2023. Under the AFSL, he also ran another company, Active & Ethical Financial Solutions, that traded as Vivid Advisory Greater Sydney. All businesses were based out of Campbelltown in Sydney’s south-west.