ob体育 has banned NSW-based adviser Christopher Edward Luff from providing financial services for five years and has cancelled the AFS licence of his business, Build Your Wealth Pty Ltd (Build Your Wealth).
Mr Luff was referred to an ob体育 Delegate in relation to concerns about financial product advice he provided, his management of conflicts of interest, and for his involvement in a self-managed superannuation investment structure where clients subsequently invested in the Storehouse Residential Trust ARSN 135 812 074 (Storehouse Trust).
ob体育鈥檚 review of a sample of Mr Luff鈥檚 advice files identified that Mr Luff did not act in the best interest of the clients and that the advice was not appropriate, given Mr Luff:
- limited the scope of the advice, and
- failed to make reasonable enquiries into the client鈥檚 relevant financial situation, objectives, needs and goals 鈥� therefore failing to base the advice on those circumstances.
ob体育 established that there was a conflict between the interests of Mr Luff and those of his clients, due to the relationships between Build Your Wealth, the investment manager of the Storehouse Trust, Storehouse Pty Ltd (which was also an authorised representative of Build Your Wealth), and associated entities.听
ob体育 found that Mr Luff failed to prioritise the interests of his clients when he recommended that his clients enter into an ongoing service program without assessing if the clients required the service or could afford the service.
ob体育 also found that Mr Luff failed to enquire of his clients as to why they wanted to invest in the Storehouse Trust and that the clients should have been made aware of:
- The risks of investing in the Storehouse Trust
- The potential risk of losing all their funds with such an investment
- The risk to the security of their living arrangement, and
- The risks if the Trust did fail.听听
The law requires financial advisers to give priority to their client鈥檚 interests when giving advice and to provide advice that is appropriate to the client. In circumstances where ob体育 has found that Mr Luff鈥檚 advice to clients in relation to the Storehouse Trust was not appropriate or fit for purpose and that there were conflicts of interest of which clients were not informed. Investors with concerns in relation to their investment may wish to seek advice from a .
ob体育 further determined that Build your Wealth failed to ensure that the financial services it provided were done so efficiently, honestly and fairly and that it failed to take reasonable steps to ensure its representatives complied with financial services laws.听
The banning and cancellation order took effect from 9 April 2024. Mr Luff and Build your Wealth Pty Ltd applied to the Administrative Appeals Tribunal (AAT) seeking a confidentiality order, a review and a stay of ob体育鈥檚 decision. The AAT granted an interim stay of the cancellation order only, which was in effect from 30 April 2024 to 24 July 2024. The AAT refused the substantive stay application and confidentiality orders on 17 July 2024. No hearing date has been set for the substantive review of ob体育鈥檚 decision.听听
The banning has been recorded on ob体育鈥檚 publicly available and the . ob体育鈥檚 Moneysmart website has useful information for consumers whose advisers have been banned.
Background
Storehouse Trust
ob体育 made an interim stop order on the Storehouse Trust due to deficiencies in the target market determination on 1 September 2023.听 Following the interim stop order, the responsible entity of the fund, K2 Asset Management Ltd (K2), made amendments to the TMD that addressed ob体育's concerns. The new TMD better defined the target market for the Fund around investor risk tolerance, investment objectives, investors need to withdraw money and the investment timeframe was amended. K2 also updated the distribution conditions in the TMD. As a result, on 15 September 2023, ob体育 revoked the interim stop order and no final stop order was made (23-241MR).
Editor's note:
On 17 July 2024 the AAT made a to refuse the substantive stay application and confidentiality orders.
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