A Melbourne-based financial services business has been ordered by the court to pay close to $9 million in penalties and has been permanently banned from the industry.
Financial Circle was found to have engaged in numerous contraventions of financial services, credit and consume protection laws.
The company was restrained from carrying on as a financial service business in January this year after ASIC obtained an order pending investigation.
Financial Circle offered personal loans of up to $5,000 to consumers that could only be obtained if the consumer agreed to receive and implement financial advice.
The advice typically recommended purchasing personal insurance products and switching super providers.
When the advice was implemented significant fees were paid to Financial Circle directly from the consumer’s superannuation.
The business also receiving ongoing commission payments from the insurers.
The process resulted in substantial erosion, in many cases up to 30 percent of the clients super balances.
The court found by conducting this business, Financial Circle had made false and misleading representations and engaged in misleading the deceptive conduct.
The court also found it had engaged in unconscionable conduct and had breached its AFSL license obligations including obligations requiring that it take reasonable steps to act in a clients’ best interest and provide efficient and honest financial services.
It was also found that Financial Circle had engaged in a credit activity without a licence.
In addition to the $8,980,000 fine, the company also must pay ASIC’s costs and has been permanently restrained from carrying on a financial services business and providing credit or entering into a credit contract as a credit provider.
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