The Australian Securities and Investments Commission (ASIC) has cancelled the licence of an entity linked to the Shield Master Fund and flagged as using telemarketers to encourage people to shift their superannuation into SMSFs to invest in high-risk assets.
The corporate regulator stated it had permanently cancelled the Australian financial services licence of Financial Services Group Australia (FSGA) on 7 June, while its responsible manager, Graham Holmes, has been permanently banned.
The licence was cancelled after ASIC determined FSGA failed to take reasonable steps to ensure two of its representatives provided financial product advice that was appropriate to the client’s circumstances or in their best interests in relation to certain instances of advice.
Additionally, FSGA did not have available adequate financial and human resources to provide the financial services covered by the licence and to carry out supervisory arrangements, nor did it maintain the competence to provide the financial services covered by the licence, or lodge financial statements and auditor’s reports on time, and lodge breach reports with ASIC.
A former sole director of FSGA, Ferras Merhi (and various entities associated with him), is already under investigation by ASIC in connection with its investigations concerning the Shield Master Fund and First Guardian Master Fund.
Authorised representatives of FSGA provided personal financial product advice to consumers who invested in the Shield Master Fund and First Guardian Master Fund.
ASIC specified FSGA must still remain a member of the Australian Financial Complaints Authority and maintain professional indemnity insurance until 4 June 2026, adding consumers could lodge a complaint about the firm with the authority until that date.
Holmes’ permanent ban prevents him from providing any financial services, performing any function involved in the carrying on of a financial services business and controlling an entity that carries on a financial services business.
“ASIC also found that Mr Holmes had accepted to be FSGA’s responsible manager (RM) ‘on paper’ only and to receive RM fees, when he knew he was not fulfilling his duties as an RM. ASIC therefore had reason to believe Mr Holmes is not a fit and proper person to participate in the financial services industry,” it said in a statement.
