The Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services licence (AFSL) of an advice firm linked to the Shield Master Fund and banned its director and compliance manager for their involvement in advice related to the fund.
The corporate watchdog stated it had cancelled the AFSL of MWL Financial Services Pty Ltd and banned director Nicholas Maikousis for 10 years and responsible manager and compliance manager Robert John Tohill for five years.
In regards to the cancellation of MWL’s licence, ASIC found the firm operated a “low-cost advice project” to receive referrals from telemarketers and lead generators and then recommend clients invest their superannuation in Shield, with more than 750 clients investing $155 million between September 2021 and February 2024 as a result of that advice.
It stated serious compliance failures by MWL included that it did not take reasonable steps to ensure its advisers provided advice that was appropriate and in the best interests of clients, and its advisers were provided with template statements of advice (SOA) that contained misleading representations of Shield’s past performance.
Additionally, MWL failed to properly assess Shield when it was added to its approved product list, was incentivised to recommend Shield, had undisclosed bonus arrangements with its financial advisers who recommended Shield and did not disclose its arrangements with lead generators in some SOAs or financial services guides (FSG).
The advice business also failed to have adequate arrangements in place to manage conflicts of interest and did not advise clients of their rights to complain to the Australian Financial Complaints Authority.
Maikousis is banned from controlling an entity that carries on a financial services business or performing any function involved in the carrying on of a financial services business from 25 September 2025 onwards.
In taking that action, ASIC stated he was responsible for setting up the low-cost advice project and was also the main driver behind it, noting he was on the investment committee that approved Shield, but did not understand a financial services business’s obligations to clients.
Tohill’s ban will prevent him providing any financial services, performing, as an officer, responsible manager or compliance manager, any function involved in the carrying on of a financial services business and controlling an entity that carries on such a business.
ASIC stated Tohill, who started as compliance manager at MWL in December 2016 and was appointed as one of its responsible managers in December 2021, was involved in contraventions of financial services laws by another person and was on the investment committee that evaluated and approved Shield.
Tohill also reviewed and approved template SOAs and certain SOAs prepared by financial advisers that contained false and misleading information about the performance history of Shield and had no information about MWL’s arrangements with lead generators.
He was also responsible for the content of FSGs that did not disclose required information about MWL’s arrangements with lead generators and for maintaining its compliance manual, which included a conflicts policy, and failed in his gatekeeper functions as compliance manager and responsible manager.
The banning of Maikousis and Tohill will be recorded on the regulator’s banned and disqualified register and the cancellation of MWL’s licence will be recorded on ASIC Professional Registers Search.
MWL, Maikousis and Tohill have the right to apply to the Administrative Review Tribunal for a review of ASIC’s decisions.
ASIC has previously banned four former MWL financial advisers, Rocco D’Amelio and Robert Crossing, as well as Matthew Simon Bradley and Isaac Jacob McQueen, in respect of advice provided in relation to Shield.
