The Australian Securities and Investments Commission (ASIC) has banned a New South Wales financial adviser for not acting in the best interest of clients and providing advice that was not appropriate in regards to investments in a trust held within an SMSF structure.
ASIC stated it had banned Christopher Edward Luff from providing financial services for five years and cancelled the Australian financial services licence of his business, Build Your Wealth Pty Ltd.
The corporate watchdog took the action after a review of Luff’s advice files found he had limited the scope of his advice and failed to make reasonable inquiries into his clients’ relevant financial situation, objectives, needs and goals, and as such failed to base the advice on those circumstances.
It noted there was a conflict between the interests of Luff and those of his clients due to the relationships between Build Your Wealth, the investment manager of the Storehouse Residential Trust, which was accessed by the SMSF structure, Storehouse Pty Ltd, which was also an authorised representative of Build Your Wealth, and associated entities.
“ASIC found that Mr Luff failed to prioritise the interests of his clients when he recommended that his clients enter into an ongoing service program without assessing if the clients required the service or could afford the service,” it said.
“ASIC also found that Mr Luff failed to inquire of his clients as to why they wanted to invest in the Storehouse Residential Trust and that the clients should have been made aware of the risks of investing in the Storehouse Residential Trust, the potential risk of losing all their funds with such an investment, the risk to the security of their living arrangement and the risks if the trust did fail.
“The law requires financial advisers to give priority to their clients’ interests when giving advice and to provide advice that is appropriate to the client.
“ASIC further determined that Build your Wealth failed to ensure that the financial services it provided were done so efficiently, honestly and fairly and that it failed to take reasonable steps to ensure its representatives complied with financial services laws.”
The banning has been recorded on ASIC’s Financial Advisers Register and Banned and Disqualified Register, but Luff and Build your Wealth have applied to the Administrative Appeals Tribunal for a stay of that decision and no hearing date has been set for the review.
