Financial planner with operations across three states slapped with conditions after allegedly failing to meet best interests of clients

Complaints about a financial services firm that has clients in three states led to ‘targeted surveillance’ by ASIC who has now slapped conditions on the operators.

An Adelaide-based financial planning firm has been pulled up for poor service to clients.

Financial planning firm Poynter Hargraves, which services thousands of clients across South Australia, New South Wales and Queensland, has been slapped with a number of new licence conditions after a “targeted surveillance” operation.

Following complaints to the corporate regulator, some of which have been seen by News Corp Australia, the Australian Securities and Investments Commission investigated the firm, headed up by Adelaide-based Craig Hargraves.

Poynter Hargraves started in Adelaide in 1987, and now has offices in Parramatta and Miranda in NSW and Brisbane, Cairns, Mackay and Rockhampton in Queensland.

The firm is understood to have acquired at least five financial services companies and their clients in the past few years.

ASIC found that the firm “had poor risk controls around conflict management and was not adequately monitoring and supervising its representatives’’.

“ASIC’s surveillance also found that some clients were provided with financial advice that failed to meet the best interests duty and related obligations.’’

ASIC has imposed additional licence conditions on the firm, and will require it to engage an independent expert to “review and make recommendations on how its audit processes and conflict management can be improved’’.

“The independent expert must also pre-vet a sample of advice and report on the effectiveness of the improvements made by Poynter Hargraves,’’ ASIC said.

Poynter Hargraves will also have to remove its sole responsible manager - managing director Craig Hargraves - and appoint one or more new responsible managers “with the necessary skills and experience’’.

A responsible manager is a required role in a financial services company who is “directly responsible for significant day-to-day decisions about the ongoing provision of .... financial services” and has the skills and knowledge to oversee such a business, ASIC’s regulatory guide on the matter says.

“AFS licensees are responsible for ensuring their representatives comply with financial services laws,’’ ASIC said in a media release.

“ASIC expects licensees to have robust controls in place for managing conflicts of interest and adequate audit processes to monitor and supervise their representatives.

“AFS licensees should conduct sufficient periodic audits of all their advisers and use suitably qualified staff to conduct these audits.’’

A complaint from a former employee made to ASIC last year, called on the regulator to investigate the firm “as a matter of urgency”.

“I found my experience working at Poynter Hargraves during this brief stint to be totally misaligned with everything that the industry has been fighting to try and clean up and opted to leave the industry rather disillusioned shortly thereafter,’’ the complaint says.

The complaint raises a number of issues including clients being moved from low cost index funds into the firm’s own product, Executive Choice.

“The acquisition of a number of businesses over the past few years, coupled with lack of staff retention and turnover makes me wonder how on earth they have had, and will have the capability to service their client base moving forward,’’ the complaint says.

“A number of my old clients have approached me to be their advisor again. They all have a tale of lack of service, lack of competent advice, lack of transparency of fees, massive hidden increases in fees and a feeling of having been “ripped off”.

“A number of these clients have decided to complain to ASIC and their individual complaints can be forwarded if necessary.’’

The complaint also says that the advisor was shown statements of advice by former clients, which were “embarrassingly deficient’’.

The licence conditions were imposed by consent following Poynter Hargraves’ engagement in addressing ASIC’s concerns, the regulator said.

Mr Hargraves has been contacted for comment.

Originally published as Financial planner with operations across three states slapped with conditions after allegedly failing to meet best interests of clients