ASIC has cancelled the Australian financial services (AFS) licence of a Melbourne-based advice firm, which was among a trio of companies that copped a $7.2 million fine from the corporate regulator in February.
ASIC took Wealth & Risk Management Pty Ltd (WRM) to the Federal Court which found that WRM breached numerous financial services laws and obligations in offering advice to clients.
The court also ordered that WRM be restrained from carrying on a financial services business for 18 years.
After the court ruling, ASIC decided to cancel the firm's AFS licence as it had ceased to carry on its financial services business.
The cancellation, announced today, came into effect on May 14.
On February 8, ASIC reported the Federal Court found that WRM and two other companies, Yes FP Pty Ltd and Jeca Holdings Pty Ltd (Yes FS) breached financial services laws in conducting their business which often ended up substantially eroding their clients' superannuation balances.
The businesses advertised "fast cash" to consumers with poor credit histories seeking loans, recommended clients switch their superannuation and take out 'high end' insurance, and drew.
They also received upfront and trailing insurance commissions, using the upfront insurance commissions generated by the financial advice to provide 'cash rebates' to the clients.
ASIC obtained an order in May, 2017 to restrain the three companies from using this 'cash rebate' model until the trial.
The court also hit a former director of the companies, Joshua Fucco, with a $650,000 penalty for being knowingly concerned in the breaches.
Fucco was also asked to pay $100,000 towards ASIC's costs of investigating and court proceedings. He also had to agree to an order restraining him from providing financial services for ten years.
WRM was granted an AFS licence on 4 March, 2013.