Retirement
$9m fine for firm after consumers lost big in super
A Victorian financial services and credit business has been ordered to pay almost $9 million for contravening a number of obligations and consumer protection laws, which saw some consumers lose up to 30 per cent of their superannuation balances.
$9m fine for firm after consumers lost big in super
A Victorian financial services and credit business has been ordered to pay almost $9 million for contravening a number of obligations and consumer protection laws, which saw some consumers lose up to 30 per cent of their superannuation balances.
Melbourne-based Financial Circle has been ordered to pay penalties totaling $8,980,000 after it participated in multiple breaches of financial services, credit and consumer protection laws.
According to ASIC, the business offered consumers personal loans of up to $5,000 on the condition that clients consented to receiving and executing financial advice. Such advice commonly included buying personal insurance products and changing superannuation providers.
Once this advice was implemented, substantial advice fees were paid to Financial Circle straight from the consumer’s superannuation account. The business also obtained ongoing commission payments from the insurers.
The court found Financial Circle liable for making false and misleading representations and engaging in misleading and deceptive conduct; engaging in unconscionable conduct; engaging in credit activity without an authorised licence; and breaching its licensee obligations under its Australian Financial Services Licence (AFSL).
This included failing to meet the obligation to take reasonable steps to ensure its authorised representatives acted in clients’ best interests and offered appropriate advice, as well as not ensuring that the financial services covered by its AFSL were provided efficiently, honestly and fairly.
In addition to the monetary penalty, the Federal Court ordered Financial Circle be permanently banned from carrying on a financial services business and providing credit or entering into a credit contract as a provider.
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