June 14, 2024

There has been 11 financial advice-related bannings by ASIC since the start of the FY2023–24 financial year, equating to one every month. 

Since 1 July 2023, there have been 11 bans by the corporate regulator related to financial advice, seven of which are permanent bans. Of the bannings that are not permanent, two are for three years, one is five years, and the other one is for seven years.

Not every single month has a banning three occurred in December 2023, followed by two in May 2024.

Common problems identified by ASIC include not being a fit and proper person, failing to act in the best interest of clients, false and misleading representations, and misleading and deceptive conduct.

Two instances led to a permanent ban for the individual; the measure was put in place after funds were deposited for the purpose of investing in a financial product, and then knowingly and dishonestly applied for other purposes.

There had also been two instances related to the transfer of superannuation into a bank account controlled by the individual.

In other cases, the banning related to administrative issues such as a failure to have systems in place to ensure annual client reviews were conducted and failure to maintain complete, accurate and reliable records of client file notes.

ASIC has stated its ongoing enforcement efforts are to improve standards across the financial advice industry.

“Financial advisers must act with honesty and integrity in their dealings with clients. ASIC may ban a financial adviser if it has reason to believe that they are not a fit and proper person to provide financial services or that they are likely to contravene a financial services law.”

Bans are recorded on ASIC’s banned and disqualified register.

There were also two instances during the period when the Administrative Appeals Tribunal (AAT) upheld two previous bans and one instance where a ban was reduced by the AAT from 10 years to six years.

The most recent action was taken last week against former financial adviser Gawad Nabi who was banned for three years. An ASIC review of advice provided by Nabi found he had “breached various financial services laws by failing to act in the best interests of clients, failing to provide advice that was appropriate to his clients, by not prioritising the interest of his clients above his own (or that of his AFS licensee), and by providing his clients with a disclosure statement that contained misleading or deceptive statements”.

The regulator said that it found Nabi has failed to maintain the high standards expected of a provider of financial services, that he does not understand the duties and obligations imposed by the Corporations Act on a provider of financial services, and that he cannot be relied upon to discharge the duties and obligations imposed by the act on a provider of financial services.

Nabi was an authorised representative of Life Plan FP Pty Ltd from 23 March 2018 to 31 March 2021, a director from 15 November 2019 to 30 December 2022, and a responsible manager from 19 January 2020 to 31 August 2022. He is also a director of Guardian Group Financial Planning Pty Ltd, a position he has held since 5 January 2018. 

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