Equiti Financial Services Sued by ASIC for Breaching the Ban on Conflicted Remuneration

The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings in the Federal Court against DOD Bookkeeping Pty Ltd (in liquidation), previously called Equiti Financial Services Pty Ltd (Equiti FS). 

According to the official press release, the company breached the prohibition against conflicted remuneration and failed to provide appropriate financial advice and discharge its best interests duty in relation to financial advice to selected clients.

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Equiti FS was part of a group of companies called the Equiti Group, which offered:

• Self-managed superannuation fund (SMSF) establishment and administration services through Equiti FS;

• real estate services through Equiti Property Pty Ltd (Equiti Property); and

• mortgage broking services through Equiti Finance Pty Ltd.

ASIC alleges that, between 26 October 2015 to 27 August 2018, Equiti FS paid three advisers bonuses totalling $164,750 upon settlement of property purchases those advisers recommended their clients make through either an existing SMSF or an SMSF to be established. The bonuses applied to purchases arranged by Equiti Property.

ASIC alleges that these bonus payments breached the ban on conflicted remuneration under the Corporations Act 2001 because they could reasonably be expected to influence the financial product advice provided, or the choice of financial product recommended, by Equiti FS advisers to retail clients.

Additionally, ASIC alleges that, between 18 May 2015 and 13 February 2018, Equiti FS breached the Corporations Act when its employed advisers gave financial advice on 12 occasions that was not in their clients’ best interests and was not appropriate for their clients.

Each advice contained a recommendation to establish an SMSF, purchase a property through the SMSF and borrow funds in order to do so.

As Fazzaco reported, ASIC has announced that Macquarie Securities (Australia) Limited has paid a penalty of $126,000​ to comply with an infringement notice given by the Markets Disciplinary Panel.