ASIC has banned Perth-based adviser Wayne Blazejczyk from providing financial services for five years for failure to meet best interests obligations when providing advice on self-managed super funds (SMSFs).
This follows an ASIC surveillance of advice provided by Mr Blazejczyk when he was an authorised representative, responsible manager and director of Australian financial services licensee Ballast Financial Management Pty Ltd (Ballast Financial).
ASIC found that Mr Blazejczyk had recommended that his clients set up SMSFs with low superannuation balances. As a result of this advice, Mr Blazejczyk exposed his clients to financial harm because the ongoing SMSF costs were higher than the costs of their existing superannuation fund. For many retail clients with balances under $500,000, setting up an SMSF may not improve their position when compared to using an APRA-regulated superannuation fund (see Background).
Mr Blazejczyk failed to make reasonable enquiries to ascertain his clients’ relevant personal circumstances before giving advice and failed to conduct a reasonable investigation into alternative products before he recommended that his clients establish SMSFs and, among other things, invest in the Bateau Global Opportunities Fund. Mr Blazejczyk is the ultimate owner and beneficiary of the SMSF administration service he recommended and the investment manager of Bateau Global Opportunities Fund. ASIC found that he failed to prioritise his clients’ interests before his own.
In statements of advice to his clients, Mr Blazejczyk also failed to disclose his interests in entities related to him and the associated benefits and remuneration he would receive that could influence the advice he provided.
ASIC expects financial advisers to take reasonable steps to identify and consider their clients’ personal circumstances when providing personal advice. Advisers have a legal obligation to prioritise their clients’ interests and to comply with the best interests duty when providing personal advice.
The banning of Mr Blazejczyk is part of ASIC’s ongoing efforts to improve standards across the financial services industry.
Mr Blazejczyk’s banning will be recorded on ASIC’s publicly available Financial Advisers Register and Banned and Disqualified Register.
Mr Blazejczyk has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
ASIC's Moneysmart website has useful information for consumers about choosing a financial adviser, including how to complain about a financial adviser and what to do if their adviser is banned. Consumers should refer to ASIC’s recent work on SMSFs when considering whether an SMSF is appropriate for them (Refer 19-277MR)
Background
Mr Blazejczyk was an authorised representative of Ballast Financial Management Pty Ltd since 1 October 2003.
ASIC recently updated INFO 206: Advice on self-managed superannuation funds: Disclosure of costs, which provides guidance for Australian financial services (AFS) licensees (including limited AFS licensees) and their representatives who provide personal advice to retail clients about SMSFs about what to consider when recommending SMSFs with starting balances below $500,000. This follows the Productivity Commission’s report Superannuation: Assessing efficiency and competitiveness, which found that on average SMSFs with balances below $500,000 have lower returns after expenses and tax compared to APRA-regulated funds.