Court Imposes $11 Million Penalty on Advice Firm for Breaching Remuneration Rules
Court Imposes $11 Million Penalty on Advice Firm for Breaching Remuneration Rules
4
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The Federal Court has imposed a substantial $11 million penalty on a financial advice firm after discovering the firm breached conflicted remuneration regulations.
The case revealed that DOD Bookkeeping, formerly Equiti Financial Services, engaged in practices that involved providing standardized advice that improperly favored in-house property investments.
DOD Bookkeeping, now in liquidation, had previously incentivized three financial advisers by paying them a total of $130,250 in bonuses. These advisers were found to have improperly encouraged clients to roll over their superannuation into self-managed superannuation funds (SMSFs) and subsequently purchase properties through Equiti Property, a related entity. Each bonus payment ranged from $750 to $1500, with advisers receiving multiple bonuses each year.
Equiti Financial Services offered a suite of services, including financial advice, SMSF establishment and administration, real estate recommendations through Equiti Property, and mortgage broking via Equiti Finance. However, its Australian financial services licence was revoked by ASIC in November 2024, following a payment from the Compensation Scheme of Last Resort.
During the court proceedings, testimonies from 12 clients surfaced, highlighting the firm's failure to tailor financial advice to personal circumstances. Evidence showed that two advisers earned almost $240,000 annually, with nearly 40 percent of their income stemming from bonuses-heightening concerns of conflicted advice.
The court's judgment emphasized the detrimental influence the bonus payments had on the advisers' recommendations, violating the conflicted remuneration laws introduced in 2013 under the Future of Financial Advice reforms. These laws aim to prevent financial advisers from receiving incentives that could bias their advice or product recommendations.
This ruling underscores the rigorous standards expected in Australia's SMSF sector and highlights the legal responsibilities of financial advisers to act in clients' best interests. ASIC's commitment to enforcing these standards seeks to uphold the integrity of financial advice and protect consumers from biased product promotions.
As part of its ongoing efforts to enhance accountability within the financial sector, ASIC plans to ramp up scrutiny of SMSF advice. This includes conducting comprehensive reviews, with the findings due in late 2025. The sector faces mounting pressure to raise operational standards and restrict access to SMSFs to suitable candidates, particularly as more claims may implicate the Compensation Scheme of Last Resort.
ASIC Deputy Chair Sarah Court highlighted the significance of the penalty, emphasizing the need for financial service licensees to prioritize client interests above all. This judgment serves as a stern warning to firms that exploit contractual loopholes for financial gain at consumers' expense.
Published:Friday, 2nd May 2025 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
The Commonwealth Bank of Australia (CBA) has reported a significant 12% increase in its business lending portfolio, reaching $168 billion by December 2025. This growth underscores the bank's commitment to supporting Australian businesses and reflects a broader economic confidence among enterprises. - read more
The Reserve Bank of Australia (RBA) has raised the official cash rate by 0.25 percentage points to 3.85%, marking the first increase in over two years. This decision, driven by persistent inflationary pressures, has significant implications for small and medium-sized enterprises (SMEs) across the country. - read more
The Australian Prudential Regulation Authority (APRA) has announced the implementation of a new policy aimed at mitigating financial risks associated with high debt-to-income (DTI) home loans. Effective from 1 February 2026, authorised deposit-taking institutions (ADIs) are required to limit the issuance of new mortgage loans with DTI ratios of six times or more to no more than 20% of their total new lending. - read more
In a significant move to bolster support for small and medium-sized enterprises (SMEs) across Australia, Renown Lending has announced an expansion of its funding pool from $250 million to $400 million. This substantial increase aims to provide fast and flexible financing solutions to businesses nationwide, addressing the growing demand for accessible funding options. - read more
In a significant strategic shift, Westpac Banking Corporation is intensifying its focus on business lending by restructuring its branch operations and investing heavily in digital platforms. This move aims to enhance support for small and medium-sized enterprises (SMEs) across Australia. - read more
The Australian Financial Complaints Authority (AFCA) has issued a cautionary advisory to small businesses regarding the potential risks associated with engaging lenders who are not members of AFCA. This warning comes in response to a noticeable increase in complaints from SMEs about lenders operating outside the regulatory framework. - read more
Australian small and medium-sized enterprises (SMEs) are proactively seeking financing solutions in response to impending changes in Australian Taxation Office (ATO) debt regulations. Effective July 1, general interest charges (GIC) and shortfall interest charges (SIC) on tax debts will no longer be tax-deductible, prompting a significant uptick in loan inquiries from businesses aiming to manage their tax obligations efficiently. - read more
When it comes to starting or expanding a business in Australia, securing funding is often a top priority. However, traditional funding options, such as bank loans or government grants, can be difficult to obtain for small businesses. - read more
Loan refinancing is a financial strategy where existing debts are replaced with new ones, usually with different terms and conditions. While it might seem like just swapping one loan for another, the nuances can be game-changers for businesses. Refinancing often provides a chance to improve borrowing conditions, such as reducing interest rates, altering loan durations, or switching to a more favourable lender. - read more
Cash flow is the lifeblood of any business, signifying the money that flows in and out of your operations. It's essential for covering daily expenses, paying employees, and capitalizing on growth opportunities. Maintaining a healthy cash flow ensures that a business can meet its obligations and invest in its future. - read more
In the dynamic world of business, navigating credit challenges is a reality for many Australian business owners. These challenges can stem from various sources, including unpaid customer invoices, unexpected expenses, or the complexities of managing cash flow. Such hurdles often come at inopportune moments, leading to recurring stress for entrepreneurs trying to maintain a stable financial standing. - read more
Effective planning is the backbone of any thriving business, and when it comes to leveraging financial products like business loans, this foresight becomes even more crucial. In the dynamic economic landscape of Australia, businesses are continually walking a tightrope, balancing investment, growth, and financial stability. The importance of prudent and strategic planning for business loan utilization cannot be overstated; it can mean the difference between a flourishing enterprise and one that struggles to keep its head above water. - read more
In Australia, business loans are a crucial tool for companies looking to grow, expand, or manage cash flow. From small enterprises to large corporations, securing funding can mean the difference between success and failure. The financial landscape is diverse, offering various loan options tailored to different needs and business models. - read more
Securing financing is a pivotal step for any startup looking to establish itself and grow. In Australia, the startup lending landscape is buoyant, offering a mix of traditional and innovative financing options. The financial ecosystem is robust yet competitive, and understanding how to navigate it is crucial for new business owners. - read more
Need Help Finding a Loan?
All finance quotes are provided free (via our secure server) and without
obligation. We respect your
privacy.
Knowledgebase
Gross Domestic Product (GDP): The total value of all goods and services produced within a country’s borders in a specific time period.