ASIC agrees EU with Queensland adviser

15-Nov-2017

By Sarah Kendell

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The corporate regulator has accepted an enforceable undertaking (EU) from a Queensland-based financial adviser that would see him banned from the financial services industry for five years.

The EU was agreed following an ASIC investigation that found Dean Hartmann, a former representative of Toowoomba licensee Hart Ensole, had advised clients to switch insurance and superannuation products without being able to demonstrate why that was appropriate.

The investigation revealed Hartmann had also failed to conduct reasonable investigations into his clients’ objectives around insurance requirements and products.

Under the EU, Hartmann would agree to cease providing financial services for at least five years, after which time he would be required to adhere to supervision requirements when he re-entered the industry, the regulator said.

Additionally, former financial adviser Bradley Sherwin, who was banned from the industry by ASIC last year, has been sentenced to 10 years’ imprisonment after pleading guilty to 25 charges relating to the collapse of his two firms, Sherwin Financial Planners and Wickham Securities.

Sherwin was sentenced in Brisbane District Court yesterday following an ASIC investigation that revealed he caused a detriment of more than $10 million to clients of Sherwin Financial Planners between 2009 and 2012.

ASIC also announced it had formally included the legal advice it received in June around the use of words such as ‘independently owned’ and ‘non-aligned’ in adviser marketing materials within its Regulatory Guide (RG) 175, which covered financial adviser conduct and disclosure.

In accordance with the announcement made by the regulator earlier this year, advisers would only be able to use those terms, as well as the term ‘non-institutionally owned’, if they met certain requirements set out in section 923A of the Corporations Act, including not receiving commissions or volume-based payments of any kind.

ASIC deputy chairman Peter Kell said the regulator wanted to ensure those providing financial services to consumers were accurately describing their services.

“Consumers should not be misled into thinking a person is free from conflicts of interest solely because they use terms such as ‘independently owned’,” Kell said.

Further, ASIC had updated RG 175 to reflect the introduction of the terms ‘financial adviser’ and ‘financial planner’ as restricted terms, starting from 1 January 2019 for new advisers and 1 January 2021 for existing advisers.

Advisers using these terms to describe their services would need to comply with incoming educational and ethical standards set by the Financial Adviser Standards and Ethics Authority.

Finally, the regulator had also updated the guide to include the new sample statement of advice it released in June.

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