ASIC has taken swift and direct action by banning a Sydney financial adviser for life after he was found to have submitted bogus documents to earn commissions.
Mr Pavan Vyas, an authorised representative of the financial advisory companies Lionsgate Financial Group Pty Ltd and HNW Planning Pty Ltd was reported to have engaged in a practice known as tombstoning where he earned commissions by using the names of non-existent people for life insurance policies. Vyas submitted applications in the names of friends without their knowledge ands completed other false documents including variations to the life insurance applications and bogus emails to pretend clients.
The industry has reported that financial advisors falsifying documents to gain commissions has been an ongoing problem throughout the sector, especially in companies who outsource some services to third parties and the practice not only compromises the integrity of the industry but can permanently harm the reputation of the company involved.
ASIC deputy chairman Peter Kell has said that, “ASIC is about ensuring gatekeepers like financial advisors do the right thing and are held to account. When they fall short, ASIC will take direct enforcement action.”
The tombstoning banning is a timely reminder that businesses need to be thorough in their background checks and financial advisory businesses have an accountability when hiring new people to ensure they are not only responsible but also have a clean compliance record.
Since January 1, 2013, ASIS has banned 11 people from the financial services industry and six of these bannings have been permanent.