The Australian Securities and Investments Commission (ASIC) has been successful in proving a financial advice licensee and its SMSF advice firm accepted conflicted remuneration from a third-party real estate business.
In a decision handed down on 29 February, the Federal Court found Perth-based RM Capital failed to take reasonable steps to ensure its authorised representative, The SMSF Club, did not accept conflicted remuneration when advising clients to establish a fund to buy property marketed by real estate agent Positive RealEstate.
During the hearing, ASIC alleged that between December 2013 and July 2016 under referral agreements, Positive RealEstate paid The SMSF Club, based in Carrara, Queensland, around $5000 each time a client bought a property through them using their fund.
The corporate watchdog claimed that as a result of receiving these payments, The SMSF Club contravened section 963G of the Corporations Act and during the period August 2013 to August 2016, RM Capital contravened section 963F of the act by failing to take reasonable steps to ensure The SMSF Club did not accept the payments.
The court agreed with ASIC’s claims, but adjourned further proceedings to consider what relief should be ordered against RM Capital and what orders should be made in relation to The SMSF Club, with the matter listed for mention on 7 March.
ASIC first sought to address the issue of the conflicted remuneration in June 2019, noting at the time it would be the first case prosecuted by the regulator in regards to that type of contravention.
