ASIC has banned a NSW financial adviser for five years after it found he failed to provide advice in the best interests of clients in relation to the use of limited recourse borrowing arrangements (LRBA) within an SMSF.
The regulator banned Sean Philip Lewis, of the Hunter Valley, from providing financial services after surveillance of his advice found he also failed to provide advice that was appropriate for his clients’ objectives.
According to ASIC, Lewis advised most of his clients to use an LRBA to fund the purchase of real property through an SMSF, and also provided insurance advice to his clients.
The regulator stated, “When providing this advice, Mr Lewis did not professionally and independently assess whether using an SMSF and borrowed funds to invest in property was an appropriate strategy for each of his clients.
“He also did not adequately investigate or offer any alternative investment strategies that may have provided greater diversification of risks.”
ASIC also found that in regards to insurance advice, Lewis prioritised his own interests over that of his clients and provided advice that would generate large commissions for himself without consideration as to whether the recommended insurance products were appropriate for his clients.
This behaviour took place while Lewis was an authorised representative of Spectrum Wealth Advisers from December 2013 to June 2018.
He was most recently an authorised representative of Consolidated Mercantile Group (July 2019 to January 2020), and prior to Spectrum Wealth was an authorised representative for five licensees between October 2010 and October 2013.
These include Wealth Today (October 2010 to January 2012), GWM Adviser Services (January 2012 to November 2012), AMP Financial Planning (December 2012 to January 2013), Chubb Insurance Australia (January 2013 to June 2013) and Meritum Financial Group (September 2013 to October 2013).
The ban will be recorded on ASIC’s Financial Advisers Register and the Banned and Disqualified Persons Register and Lewis has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
The banning of Lewis follows similar action against another Spectrum adviser and the former director of the advice group earlier this year.
In April 2020, ASIC permanently banned Jane Elizabeth Myers from providing financial services in relation to inappropriate SMSF advice while she was an authorised representative of Spectrum Wealth Advisers from October 2013 to March 2017.
In February of this year, ASIC also banned Spectrum Wealth Advisers director, chief executive officer and responsible manager Mark Schroeder from providing financial services for six years for his role in a number of compliance failures of the licensee.
At the same time, Spectrum ceased trading and its parent company, Freedom Insurance Group, applied to ASIC to cancel Spectrum’s AFS licence which took place on 14 February 2020.
