ASIC filed its case against the Sydney-based RI Advice Group — now owned by IOOF — and John Doyle on Thursday after promising in September to expedite its Banking Royal Commission related matters. The regulator says it has over 300 investigations on foot.

The watchdog alleges RI failed to take reasonable steps to ensure that Doyle provided appropriate advice and acted in clients’ best interests. Doyle acted as principle of The Carrington Corporation and was an authorised representative of RI between May 2013 and June 2016. RI was an ANZ financial advice business until it was acquired by IOOF in October last year.

ASIC alleges Doyle gave “cookie cutter” advice to his retail clients on how to invest in certain complex financial products, Macquarie Flexi 100 Trust and Instreet Masti 36 and 38, without considering their financial goals or risk tolerance.

Doyle was one of RI’s biggest income earners, ASIC claims, with a letter from ANZ in 2014 putting his annual “inflow” at more than $48 million. Some of Doyle’s clients were preparing for retirement, ASIC said, and the financial adviser received upfront and ongoing commissions for all client investments.

According to ASIC’s concise statement, Doyle failed a competency and knowledge test and did not pass RI’s pre-vetting processes until 18 months after he had been brought on as an authorised representative. The firm generally expected new financial advisers to pass the test within three months of being signed on, ASIC said.

“Insofar as RI subjected Doyle’s advice to pre-vetting, Doyle regularly bypassed this requirement, as RI knew or ought to have known. Insofar as RI provided paraplanning and other assistance to Doyle, this was largely to enable him to pass the ‘pre-vetting’ stage, without ensuring Doyle’s compliance would be sustained, in the long run, without assistance,” the regulator said.

Subsequent company audits saw Doyle getting the “worst possible rating” on the quality of his advice and raised “significant concerns” about the adviser’s conduct. According to a report released after the Royal Commission, Doyle’s results were so bad they “skewed the audit results across the RI Advice Group business”.

A notice of termination was issued in June 2015, however this was not to come into effect until December that year, with RI saying it would revoke the notice if Doyle improved.

After a further review identified more non-compliant behaviour, RI suspended the financial adviser, limiting his activities to providing advice to 700 existing clients only, and extending the termination notice to June 2016.

“RI took too long to issue the suspension notice and to terminate Doyle’s authorisation as its authorised representative. RI knew, or ought to have know, of Doyle repeatedly recommending structured products to clients and thereby earning commissions. All the while, notwithstanding the known risks, RI permitted Doyle to advise clients extensively.”

The regulator has also accused RI of contravening its obligations as an Australian Financial Services Licence holder.

ASIC is seeking declarations, pecuniary penalties and compliance orders from the court to ensure that RI does not commit further contraventions and to ensure Doyle’s clients are remediated.

RI and Doyle face a maximum penalty of $1 million and $200,000 per contravention respectively.

In a statement to Lawyerly, IOOF noted ASIC’s announcement about the civil penalty action.

“IOOF notes that RI Advice was acquired as part of its acquisition of the ANZ Dealer Groups on 1 October 2018. The conduct which is subject to these proceedings occurred prior to the acquisition by IOOF. IOOF understands clients have been remediated.”

Prior to IOOF’s acquisition of RI, contractual protections were provided to IOOF regarding alleged conduct that occurred while the firm was under ANZ’s control.

Giving testimony to the Royal Commission in May 2018, then head of RI Advice Group Darren Whereat admitted that the company had not completed its review and remediation of Doyle’s clients, at the time assigning this matter a “low priority”.

“At the time Mr Whereat gave evidence RI Advice Group had contacted only a very small number of Mr Doyle’s clients to determine whether they had suffered detriment. Mr Whereat acknowledged that it was unacceptable that it had taken two to three years to identify and remediate clients found to have been given inappropriate advice,” the Banking Royal Commission report said.

Doyle did not appear in person at the Royal Commission and was not represented.

The case is Australian Securities & Investments Commission v RI Advice Group Pty Ltd & Anor.