The three Melbourne-based firms – Wealth and Risk Management, Yes FP and Jeca Holdings, the latter two of which are now in liquidation – were the subject of legal action by ASIC following accusations of numerous wrongdoings.
ASIC accused the businesses of advertising ‘fast cash’ to consumers with poor credit histories, requiring clients to implement financial advice that recommended switching super accounts, charging fees and commissions out of those super funds, and using upfront commissions from high-end insurance policies sold to customers as the source of ‘cash rebates’ to those clients.
Such actions were in breach of the rules governing financial services business, which include taking reasonable steps to ensure advice is appropriate and in a client’s best interest, and that services are provided honestly and fairly.
Yes FP was also accused of providing services without an Australian Financial Services Licence (AFSL).
Earlier this month, the Federal Court found the three companies guilty on all fronts, which led to a substantial erosion of the affected clients’ super balances.
Pecuniary penalties totalling $7.15 million were ordered against the three companies, which were also banned from providing financial services for 18 years.
Their former director, Joshua Fuoco, was also found guilty of being knowingly concerned, and was personally fined $650,000, ordered to pay a further $100,000 towards ASIC’s costs and banned from providing financial services for 10 years.
ASIC deputy chair Peter Kell decried the “very poor conduct” demonstrated by the companies.
“This is a significant outcome in a case where a financial services business has deliberately flouted the law and targeted financially vulnerable consumers.”