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Tuesday 11 November 2014

14-299MR ASIC seeks court order to stop property promoter from providing unlicensed financial product advice on SMSFs

ASIC has commenced proceedings in the Supreme Court of New South Wales seeking interim and final orders to prevent property investment promoter, Park Trent Properties Group Pty Ltd (Park Trent), from carrying on an unlicensed financial services business.

Park Trent’s business promotes the use of self-managed superannuation funds (SMSFs) to purchase investment property.

ASIC alleges and is seeking declarations that Park Trent is unlawfully carrying on a financial services business without an Australian financial services (AFS) licence.

ASIC understands that Park Trent has advised at least 500 members of the public to establish and switch funds into an SMSF which are then used to purchase investment properties that are owned or promoted by Park Trent companies.

ASIC is also seeking orders requiring Park Trent to notify current and former clients about the proceeding and to post a notice regarding ASIC’s proceeding on its website.

ASIC Commissioner Greg Tanzer said, ‘Collectively, Australians hold over $1.85 trillion worth of assets in superannuation funds, with $557 billion held in SMSFs. It is important when making decisions regarding superannuation to consider obtaining appropriate advice from an authorised financial adviser.

‘Dealing with an authorised adviser affords specific protections under the law, such as acting in the best interests of clients, a duty to avoid conflicts of interest and providing access to dispute resolution schemes.’

The first hearing of the matter is listed for 26 November 2014.

Background

Section 911A of the Corporations Act requires any person carrying on a financial services business in Australia and providing financial product advice to hold an AFS licence or be a representative of an AFS licensee.

ASIC contends that the conduct that is the subject of this action required Park Trent to have an AFS licence or be an authorised representative of an AFS licensee.

ASIC has previously released substantial guidance regarding the establishment and ongoing operation of SMSFs. This includes reference to various SMSF guides available through the Australian Taxation Office.

ASIC also recommends that people seek the advice of an expert when considering an SMSF.

For further details visit the MoneySmart website.

Editor's note 1:

On 26 November 2014 timetabling orders were made in ASIC's application for interim and final relief. The matter was re-listed for 15 December 2014 for further directions.

Editor's note 2:

At the directions hearing on 15 December 2014, ASIC's
application for interim relief was listed for hearing on 2 February 2015.  The
hearing is estimated to take one day. At the hearing on 2 February 2015, ASIC  will seek, amongst other things, orders restraining Park Trent from carrying on a financial services business until the hearing of ASIC's application for final relief.

Editor's note 3:

ASIC's interlocutory application was not determined on 2 February 2015 and orders were made expediting the trial of the proceeding. The trial was set down for hearing for 4 days commencing 7 April 2015.

Editor's note 4:

On 26 March 2015, his Honour Justice Sackar ordered that the April trial dates be vacated and that the trial be set down for 3 - 12 June 2015. The new trial date will ensure that outstanding interlocutory issues are resolved prior to trial, and that both ASIC and Park Trent have sufficient time to prepare for trial.

Editor's note 5:

The trial of the proceeding was heard on 3 - 12 June 2015. Closing submissions were heard on 19 and 22 June 2015. His Honour Acting Justice Sackville presided over the trial. His Honour has reserved his judgment.

Editor's note 6:

On 15 October 2015, the Supreme Court of NSW found Park Trent had been unlawfully carrying on a financial services business for over 5 years by providing advice to clients to purchase investment properties through a SMSF. (refer: 15-300MR)

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Last updated: 23/03/2016 03:07