ASIC has banned Queensland-based adviser Gregory Forster from providing financial services for a period of five years after a surveillance showed he provided inappropriate advice to clients and failed to act in their best interests.
The regulator’s surveillance found that Forster recommended new superannuation and insurance products to his clients without considering their existing products and services. He had failed to take into account his clients’ actual circumstances when providing advice; instead he obtained limited information and made a series of assumptions about their personal circumstances.
In many cases, he recommended insurance where the premiums were unaffordable. Even though the premiums were paid out of his clients’ superannuation, sometimes they were significantly more than his clients’ normal superannuation contributions, potentially leading to erosion of the clients’ superannuation balance. ASIC found that Forster had made those recommendations even though the clients had originally sought his advice because they were unhappy with their superannuation balance.
ASIC looked at advice Forster provided to clients while he was an authorised representative of Australian financial services (AFS) licensees Breakaway Finance Group and ANZ-owned Millenium 3.
Forster had also significantly understated the costs associated with implementation of his advice, particularly costs associated with running a self-managed super fund (SMSF). ASIC found that the true costs of running the recommended SMSF were significantly higher than disclosed to the client.
In some other cases, ASIC also found that he had not complied with the requirements for a Statement of Advice (SOA) – instead of disclosing the dollar value of fees, he had described fees in percentage terms.
The banning of Forster is part of ASIC’s ongoing efforts to improve standards across the financial services industry. It will be recorded on ASIC’s publicly available Financial Advisers Register and on Banned and Disqualified Persons Register.
ASIC expects financial advisers to adequately understand their clients’ personal circumstances and take those circumstances into consideration when providing personal advice. When recommending that clients dispose of or acquire financial products, advisers must fully disclose the costs associated with their advice so that clients can make informed decisions.
Advisers have a legal obligation to prioritise their clients’ interests and to comply with the best interests duty when providing personal advice. ASIC will continue to take action where advisers don’t comply with the law.