ASIC issues 7-year ban to Queensland-based adviser

ASIC has banned Queensland-based financial adviser Timothy Shapter from providing financial services for a period of seven years, and cancelled the Australian Financial Services (AFS) Licence of Smart Solutions Group, of which Mr Shapter was a director.

ASIC’s review of a sample of Mr Shapter’s advice files found that he provided advice that was not in his clients’ best interests, was not appropriate to his clients, and that gave priority to generating fees for himself over the financial interests of his clients.

The review found that Mr Shapter provided inappropriate switching advice by recommending that clients switch out of their existing superannuation and insurance products, and into higher fee paying products.

According to the regulator, Mr Shapter also used a ‘layered advice’ strategy, whereby he provided his clients with a superannuation statement of advice first, followed by an insurance statement of advice a few weeks later. This process was found to be confusing for clients and, in some cases, resulted in lost insurance or policy exclusions.

Additionally, the review revealed that Mr Shapter issued multiple statements of advice and provided inappropriate switching advice to generate fees for himself.

Mr Shapter obtained most of his clients under a referral arrangement with a third party engaged by Smart Solutions, which cold called potential clients and obtained limited details about their circumstances.

Mr Shapter is believed to then have used this limited information to prepare his advice documents. As such, ASIC determined that he could not have properly enquired about, or considered, his clients’ needs and circumstances, their reasons for wanting advice, or the most suitable options.

“Financial advisers have a legal obligation to act in the best interests of their clients when providing personal advice,” said ASIC.

“This includes taking reasonable steps to understand their clients’ personal circumstances and exploring existing financial products to ensure they are providing appropriate advice that meets their clients’ objectives.”

ASIC has also cancelled the AFS licence of Smart Solutions because the licensee failed to ensure that financial services were provided efficiently, honestly and fairly.

The banning of Mr Shapter and the cancellation of Smart Solutions’ AFS licence are part of ASIC's ongoing efforts to improve standards across the financial services industry.