ob体育 has cancelled the Australian financial services (AFS) licence of National Advice Solutions Pty Ltd (National Advice Solutions). In addition to this, ob体育 has banned two Gold Coast-based responsible managers, Ms Gail Glasby and Mr Paul Carcallas from providing financial services for a period of 10 years.
Licensee failings
ob体育 cancelled the AFS licence of National Advice Solutions because it failed to ensure that financial services covered by the licence were provided efficiently, honestly and fairly. National Advice Solutions adopted a 鈥榣ayered advice鈥� strategy whereby the licensee separated the advice into pre-determined topics, regardless of the client鈥檚 personal circumstances, goals or advice needs. The 鈥榣ayered advice鈥� strategy was found to actively impede financial advisers from complying with the financial services laws, as clients were provided with expensive and templated advice that was not appropriate for their personal circumstances.
Under the strategy, clients would generally receive advice about their superannuation first, which scoped out insurance even where the client was paying their insurance premiums from their existing superannuation account. ob体育 found that in these circumstances, it was inappropriate to separate out the superannuation and insurance advice as the products are so intrinsically linked that advice regarding the two topics cannot appropriately be delivered in isolation.
Responsible Managers
ob体育 found that National Advice Solutions also failed to adequately monitor and supervise its authorised representatives and maintain competence to provide the financial services covered by its licence.
Ms Glasby and Mr Carcallas were members of the Compliance Committee and the responsible managers of the AFS licence. Mr Carcallas also performed an audit function.
A responsible manager is expected to assess strategies and policies used within the business and ensure that they are consistent with the obligations of the licensee. ob体育 found that Ms Glasby and Mr Carcallas bear part of the responsibility for the systemic failings that arose from the use of the 鈥榣ayered advice strategy鈥�.
Advice failings
Mr Carcallas also provided financial advice to clients. In a sample of advice provided by Mr Carcallas, ob体育 found he did not act in the best interests of clients, the advice was not appropriate, and he prioritised his interests (or that of the AFS Licensee) over the interests of the client.
As Mr Carcallas provided advice in accordance with the 鈥榣ayered advice鈥� strategy, the advice was templated, inappropriately scoped, and he failed to identify or consider the relevant circumstances of the clients when preparing the advice, including when recommending the client participate in an ongoing advice arrangement.
Further, ob体育 found that the statements of advice provided by Mr Carcallas were defective, containing projections not based on recommendations provided and failed to include all costs associated with implementing the recommendations.
ob体育 found that these projections were included to persuade the clients to proceed with the advice. The omission of these costs may have led clients to believe that they would have more funds available in retirement than they could realistically expect.
Background
The banning of Ms Glasby and Mr Carcallas and the cancellation of National Advice Solutions鈥� AFS licence are part of ob体育's ongoing efforts to improve standards across the financial advice industry.
The banning of Ms Glasby and Mr Carcallas will be recorded on ob体育's publicly available聽聽and the聽Banned and Disqualified Persons Register.
ob体育 previously cancelled Smart Solutions Group (Aust) Pty Ltd鈥檚 licence for adopting a similar 鈥榣ayered advice鈥� strategy, where the process was found to be confusing for clients and, in some cases, resulted in lost insurance or policy exclusions (see MR 20-020MR).
National Advice Solutions鈥� licence cancellation was effective from 13 December 2022. National Advice Solutions had held AFS licence 514210 since 26 June 2019. Under the Corporations Act, ob体育 has the power to suspend or cancel an AFS licence if a licensee does not comply with its obligations under s912A.
Ms Glasby, Mr Carcallas and National Advice Solutions have the right to seek a review of ob体育's decision at the Administrative Appeals Tribunal.