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Penalties totalling $7.8 million have been issued to three related businesses for numerous breaches of consumer protection and financial services laws.
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.
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They were ordered by the Federal Court to pay penalties totalling $7,150,000. A former director of the companies, Joshua Fuoco, was found to have been knowingly concerned in the breaches and was ordered to pay a penalty of $650,000.
Case background
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.
In addition to ordering that the companies pay pecuniary penalties, the Federal Court ordered that they:
- be restrained from carrying on a financial services business for 18 years; and
- be permanently restrained from (1) making any offers of cash payments in connection with the provision of financial advice or (2) entering into or advertising cash rebate agreements or other like arrangements.
Yes FP was also accused of providing services without an Australian Financial Services Licence (AFSL).
The court also made orders requiring the companies and Mr Fuoco to pay ASIC’s costs.
ASIC deputy chair Peter Kell said that the breaches were the result of very poor conduct, adding: “This is a significant outcome in a case where a financial services business has deliberately flouted the law and targeted financially vulnerable consumers.”
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.
[Related: ASIC seeks to bankrupt car lender director]
