Hewish and Australian Securities and Investments Commission

[2025] ARTA 1822

Hewish and Australian Securities and Investments Commission [2025] ARTA 1822 (4 August 2025)

Applicant:Joel Hewish

Respondent:  Australian Securities and Investments Commission

Tribunal Number:                2024/3838 

Tribunal:Deputy President O'Donovan

Place:Brisbane

Date:4 August 2025

Decision:The Tribunal affirms the decision under review. The 10-year ban applies from the date of the decision under review.

Statement made on 04 August 2025 at 4:59pm

Disclaimer: Redactions appearing square brackets indicate that information has been removed from this decision in compliance with an order of the Tribunal. The names of the applicant’s clients have been replaced with pseudonyms in compliance with an order of the Tribunal.

Catchwords

CORPORATIONS – Discipline and Regulatory – banning order – whether there is reason to believe applicant is likely to contravene a financial services law – whether applicant has been involved in the contravention of a financial services law by another person – whether applicant is not a fit and proper person to provide financial services or carry on a financial services business – whether there is a reason to believe that applicant is not adequately trained or competent to provide financial services or carry on a financial services business – applicant’s company set up and administered self-managed superfunds –whether applicant’s company breached best interest obligations – whether applicant’s company’s licensees failed to act in clients best interests – whether applicant’s company took reasonable steps to ensure licensees complied with financial services laws – whether applicant appropriately managed conflicts of interests –  scope of banning order – whether there was dishonest conduct – whether there was conduct that shows serious incompetence or irresponsibility – whether there was a significant adverse impact on confidence in the integrity of the financial services industry – decision under review affirmed

Legislation

Corporations Act2001 (Cth) ss 766A, 766B, 911A, 912A, 920A, 917B 917D, 960A, 961B, 961G, 961H, 961J

Cases

Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127

Williams and Australian Securities and Investments Commission [2018] AATA 2312

Secondary Materials

ASIC, Regulatory Guide 175: AFS licensing: Financial product advisers—Conduct and disclosure (21 November 2024)
ASIC, Regulatory Guide 105: AFS licensing: Organisational competence (23 June 2022)
Financial Adviser Standards and Ethics Authority Ltd, Financial Planners and Advisers Code of Ethics 2019 (at 8 February 2019)

Statement of Reasons

1. Since the advent of compulsory employer contributions to superannuation in the 1980s, employed Australians have been required to save for their retirement. The system has resulted in ordinary Australians accumulating a valuable asset pool which is, for the most part, locked away in well-regulated investments until the funds are needed at retirement. The rigidities of the system can however be ameliorated somewhat by the use of self-managed super funds (‘SMSFs’). SMSFs provide a means by which a person can take more control of their superannuation and how it is invested. However, SMSFs usually add additional compliance expense and greater attention is usually required when choosing investments.

2. The flexibility that SMSFs provide also creates an opportunity for participants in the financial services industry who specialise in charging fees for managing other people’s money, to lure capital away from Australian Prudential Regulation Authority (APRA)-regulated funds with a view to earning fees off the superannuation savings of employees with reasonably significant superannuation accumulations.

3. In many circumstances this will be in the interests of the proposed manager of the funds but may not be in the interests of the superannuation account holder.    

4. For a two year period between 2020 and 2022, Joel Hewish and his business associates invested considerable effort in persuading Australian’s earning above-average incomes but by no means sophisticated investors, to pull funds out of their APRA-regulated superannuation funds in order to invest through an SMSF in an investment products they were promoting.

5. Fees were charged by the firm that persuaded the person to switch into the investment. Fees were charged by Mr Hewish’s firm United Global Capital (‘UGC’) for setting up and administering the SMSF. Fees were charged by a firm associated with Mr Hewish for managing the capital invested in the investment product.

6. As it turned out, the investment into which the bulk of the funds were invested, Global Capital Property Fund Ltd (‘GCPF’) was, even at its best, a modest investment performer. The hapless investors who moved their funds out of strongly performing low-fee funds were worse off. The only persons who benefited from the arrangements that were put in place were Mr Hewish, the companies he owned, and his associates who did the marketing. They were financially rewarded for deceiving people about the nature of the investment they were about to undertake and persuading them to remove funds from low-fee, secure environments, to higher-fee, narrow, illiquid and less well protected investments.

7. If financial advice markets were unregulated it  would be possible to engage with people in this self-interested way - to adopt the approach of Gordon Gekko in the film Wall Street whose attitude was ‘that a fool and his money were lucky to get together in the first place’.[1] But in this case Mr Hewish was a financial adviser – key person, responsible manager and sole director of United Global Capital Pty Ltd, the holder of an Australian Financial Services Licence (‘AFSL’). [2] When his authorised representatives, operating under his company’s licence were persuading clients to move their funds to the specific investment they had agreed to promote, they owed those clients a range of duties, including a duty to act in the client’s best interests. Mr Hewish needed to supervise the performance of those obligations.

   [1] A bastardisation of the older aphorism ‘a fool and his money are soon parted’.

   [2] T-Documents, T7.1, 1884; T7.37, 2427.

8. Those obligations were not reflected in how Mr Hewish went about his business.

9. Before turning to the technical detail of the obligations it is worth highlighting the change in the character of the financial advice industry that has occurred in recent years. It has gone from an industry where financial advice was often motivated by undisclosed fees paid by product promoters, to an industry where consumers can expect to trust and rely on the advice they are being given on the basis that it is both independent and in their interests. The changes are well summed up in the introduction to the Financial Planners and Advisers Code of Ethics 2019.

   In 2017 the Commonwealth Parliament amended the Corporations Act 2001 to raise the education, training and ethical standards of financial advisers and financial planners, promote enhanced consumer trust and confidence in financial planners and financial advisers and refocus them from providing commercial services to acting as professionals.

   While the ethos of ‘the market’ legitimises the pursuit of self-interest through the satisfaction of others’ wants, the ethos of “the professions” aims to secure the public good through the subordination of self-interest in favour of serving the interests of others.

   In return for renouncing the pursuit of self-interest, society often provides members of the professions with a range of formal and informal privileges (such as a “monopoly” right to undertake certain types of work).

   Appropriate financial advice can significantly improve people’s financial well-being. In a time of increasing volatility, it is in the public interest that the profession enjoy the trust and confidence of its clients and the wider community. In turn, this requires that members of the profession develop the knowledge, skills and dispositions required to earn that trust.

   Collectively, financial planners and advisers are members of Australia’s newest profession. As such, while they formerly provided a commercial service, they should be committed to offering a professional service – informed by a code of ethics intended to shape every aspect of their professional conduct.[3]

   [3] Financial Adviser Standards and Ethics Authority Ltd, Financial Planners and Advisers Code of Ethics 2019 (at 8 February 2019) para 5.

10. If Mr Hewish had brought this mindset to the series of transactions that he, his firm and his associates promoted, he would never have embarked upon the course of conduct which has ended in these proceedings. Regrettably Mr Hewish, perhaps out of a misplaced optimism about his capacity to deliver better returns to investors than were available anywhere else, developed business arrangements that involved significant conflicts of interest on his part. The legal relationships with his clients were structured in the hope that legal obligations that protected the client, could be avoided rather than discharged. The result was the significant movement of client funds into transactions that no financial adviser pursuing the best interests of their client could recommend. Ultimately Mr Hewish and UGC came to the attention of the regulator, the Australian Securities and Investments Commission (‘ASIC’).

11. On 31 May 2024 an ASIC delegate made a decision to ban Mr Hewish from the financial services industry for a period of ten years. Put in broad terms, ASIC formed the view that he had devised and implemented a scheme whereby Australians with superannuation balances of more than $150,000 were persuaded, after receiving financial advice from Mr Hewish’s financial advice firm UGC or its authorised representatives, to shift their superannuation savings into an SMSF and then invest in investments managed by entities associated with Mr Hewish. Those investments included buying shares in the unlisted public company GCPF and an investment called Pivotal Diversified Fund (‘Pivotal’).

12. GCPF invested the funds raised in various special purpose vehicles engaged in property development in Australia. Pivotal invested in a range of products and companies, including GCPF, but also products with exposure to international shares.

13. In its decision, the ASIC delegate identified numerous breaches of the Corporations Act 2001 (Cth) (‘Corporations Act’) as providing the basis for the banning order. A ban of ten years was imposed.

14. Following the banning order, Mr Hewish applied to the Administrative Appeals Tribunal (‘AAT’) to review the banning order. The matter proceeded to hearing in the Administrative Review Tribunal (‘Tribunal’) following the repeal of the Administrative Appeals Tribunal Act 1975 (Cth) (‘AAT Act’).

15. In broad terms, Mr Hewish does not dispute how UGC came to acquire its clients, what advice they got and what investments they ended up putting their money into. Mr Hewish’s view is that at each step of the way the client relationships were managed in such a way that neither he, nor UGC nor any of its employee’s or authorised representatives ever breached in any significant way, any of the obligations owed. If there were breaches along the way they were inadvertent and not the result of any deliberate attempt to circumvent any legal requirements.

16. Mr Hewish believes that he has been seriously mistreated by ASIC. In his assessment he entered into a series of business arrangements over time which involved him offering a limited service to clients who were referred to him by entities in which he had no financial interest. When referred clients came to UGC they had already been persuaded to set up an SMSF and invest in particular products. He was entitled to advise those clients on a limited range of issues and that is what he and other advisers at UGC did.  As the referral arrangements changed over time and referrals began to relate to products that Mr Hewish had an interest in, arrangements were adapted to ensure compliance.

17. In setting up these arrangements, Mr Hewish believes that he followed the best advice available about what his duties were. He also invested in compliance advice to ensure that his financial advice firm UGC met all of the requirements.

18. Mr Hewish accepts that clients set up SMSFs and invested in the investments marketed to them by associates, including investments which Mr Hewish stood to gain from, but, he contends, all of the critical decisions about the investment were made before clients were referred to UGC. He contends clients largely invested in those products because they were interested in residential property investments. These investment vehicles, including GCPF, were a good investment, with a good chance of offering better performance than APRA approved superannuation funds and this was appealing to potential investors. Any breach that may have occurred was despite his efforts to ensure compliance. He should not be dealt with harshly if it turns out that he made mistakes.

19. ASIC sees the matter somewhat differently. The list of bases on which it relies to trigger the discretion to make the banning order is long. [REDACTED] He failed to properly supervise what representatives were saying to potential clients notwithstanding that they were authorised representatives of UGC and operating under its AFSL and were giving financial product advice. When the clients were then referred to UGC he failed to (among other things):

    (a)Ensure that conflict of interest obligations were complied with;

    (b)Ensure that the duty to act in the best interests of the client was observed;

    (c)Failed to provide financial services efficiently and fairly;

    (d)Failed to take reasonable steps to ensure that representatives complied with the law.

20. As a result of the investments, Mr Hewish gained financially through the fees paid by GCPF and Pivotal to the relevant management companies, as well as fees paid to UGC for set up and administration costs incurred by the client as a result of setting up an SMSF. ASIC contend that this self-interested conduct undertaken in breach of his duties means that Mr Hewish should be banned from the industry and the ban should be for the period of ten years.

21. Having reviewed the matter carefully, I am satisfied that the approach contended for by ASIC is correct.

22. To make a banning order in relation to Mr Hewish, ASIC (and the Tribunal standing in its shoes):

    (a)must be affirmatively satisfied that he has been involved in the contravention of a financial services law by another person;[4] or

    (b)must have reason to believe he is likely to contravene a financial services law;[5] or

    (c)must have reason to believe that Mr Hewish is not a fit and proper person to provide financial services or carry on a financial services business;[6] or

    (d)must have reason to believe that Mr Hewish is not adequately trained or competent to provide financial services or carry on a financial services business.[7]

    [4] Corporations Act s 920A(1)(g).

    [5] Ibid, sub-s (1)(f)

    [6] Ibid, sub-s (1)(d)

    [7] Ibid, sub-s (1)(da).

23. I am satisfied that Mr Hewish has been involved in the contravention of a financial services law by another person, namely UGC and contraventions by UGC’s authorised representatives. I have reason to believe that Mr Hewish is not competent to carry on a financial services business. Not because he is not financially savvy but because he has no developed sense of how to ensure that advice providers discharge their duty to act in the best interests of his clients, to manage conflicts of interest or to provide advice in proper form when required.

24. [REDACTED] This conduct allowed representatives of UGC to facilitate investments for clients that were unlikely to be in their best interests but were certainly in the best interests of Mr Hewish and those associated with him. The conflict of interest was significant and left entirely unmanaged.

25. I have determined that the banning order made by ASIC is of an appropriate length. My reasons for that conclusion are set out below.

26. In making this decision I have had regard to the following evidence:

ID	DESCRIPTION
T	T-Documents (T1.1 to T8.2; pages 1 to 6958)
ST	ST-Documents (ST9 to ST77, pages 6959 to 8062)
A1	Affidavit of Mr Joel Hewish dated 1 November 2025
A2	Statutory Declaration of Jovan Videkanic made 22 January 2025
A3	Statutory Declaration of Milutin Petrovic made 23 January 2025
A4	Statement of Sonia Ambwani dated 24 January 2025
A5	Statement of Sonia Ambwani dated 7 April 2025
A6	Affidavit of Louis van Copenhagen made 6 April 2025
A7	Statement of Louis van Copenhagen dated 23 January 2025
A8	Presentation from Integral Wealth Group labelled on the front page ‘Helping you secure your financial future’ consisting of 11 pages.
R1	Letter from Integral Wealth Group to Simone Howe of ASIC, attached to an email dated 1 September 2022
R2	Letter from Wealth Rite to Simone Howe of ASIC, attached to email dated 1 September 2022
R3	Affidavit of Robert Matthew Chiarella made 7 April 2025
R4	Email from Hope Earl to ASIC delegate dated 12 April 2025
R5	List of UGC’s authorised representatives dated 25 March 2025
R6	Screenshot of T7.67 page 3644

THE FOLLOWING WITNESSES GAVE EVIDENCE AT THE HEARING AND WERE CROSS EXAMINED:

(a)Joel Hewish;

(b)Sonia Ambwani;

(c)Louis van Coppenhagen.

EXPLANATION OF FINANCIAL SERVICE PROVIDERS OBLIGATIONS

1. Before discussing the behaviour of UGC and Mr Hewish’s role in it, it is appropriate to discuss the duties of a person providing financial product advice. It is important to do this because UGC and others acting on its behalf sought to engage with clients on terms that put them outside the reach of the obligations enumerated in the Corporations Act. But statutory duties cannot be avoided by writing up a document that suggests that the relationship is of one kind, when in fact its character is quite different.

2. It is therefore helpful to understand the legal obligations that UGC and its authorised representatives were endeavouring to avoid when the relationship with the client was created or described, before looking at what actually occurred between the clients and the various advisers they encountered.

3. In broad terms, the Corporations Act controls how financial product advice is given by first prohibiting the carrying on of a financial services business unless the person holds an Australian Financial Services Licence (‘AFSL’) covering the provision of the particular financial services provided.[8]

   [8] Corporations Act s 911A.

4. A person provides a financial service if they, among other things:

   (a)Provide financial product advice; or

   (b)Deal in a financial product.[9]

   [9] Ibid, s 766A(1).

5. Subject to some exceptions, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:

   (a)is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or

   (b)could reasonably be regarded as being intended to have such an influence.[10]

   [10] For the complete definition see Corporations Act s 766B.

6. Personal advice, subject to some exceptions, is financial product advice that is given or directed to a person (including by electronic means) in circumstances where:

   (a)The provider of the advice has considered one or more of the person’s objectives, financial situation and needs…; or

   (b)A reasonable person might expect the provider to have considered one or more of those matters.[11]

   [11] Ibid.

7. General advice is financial product advice that is not personal advice.

8. Subject to some exceptions, when giving personal advice a person must give a Statement of Advice in accordance with s 946A.

1. Authorised representatives of an AFSL holder can provide financial product advice if that is authorised under the licence.

2. Providers of personal advice to a retail client must act in the best interests of the client in relation to the advice.[12] The provider satisfies that duty if the provider proves that the provider has done each of the following:

   [12] Ibid, s 961B(1). Subsection (2) sets out how that duty can be satisfied.

   (a)Identified the objectives, financial situation and needs of the client that were disclosed to the provider by the client through instructions;

   (b)Identified:

   (i)the subject matter of the advice that has been sought by the client (whether explicitly or implicitly); and

   (ii)the objectives, financial situation and needs of the client that would reasonably be considered as relevant to advice sought on the subject matter (the client’s relevant circumstances);

   (c)where it was reasonably apparent that information relating to the client’s relevant circumstances was incomplete or inaccurate, made reasonable inquiries to obtain complete and accurate information;

   (d)assessed whether the provider has the expertise required to provide the client advice on the subject matter sought and, if not, declined to provide the advice;

   (e)if, in considering the subject matter of the advice sought, it would be reasonable to consider recommending a financial product;

   (i)conducted a reasonable investigation into the financial products that might achieve those of the objectives and meet those of the needs of the client that would reasonably be considered as relevant to advice on that subject matter; and

   (ii)assessed the information gathered in the investigation;

   (f)based all judgements in advising the client on the client’s relevant circumstances;

   (g)taken any other step that, at the time the advice is provided would reasonably be regarded as being in the best interests of the client, given the client’s relevant circumstances.

3. The provider of personal advice must also:

   (a)Provide the client with appropriate advice;[13]

   (b)Warn the client if the advice is based on incomplete or inaccurate information;[14] and

   (c)Prioritise the interests of the client.[15] In particular, a provider who knows or ought reasonably know that there is a conflict between the interests of the client and the interests of an associate of a financial services licensee of whom the provider is a representative, the provider must give priority to the client’s interests when giving the advice.

   [13] Ibid, s 961G.

   [14] Ibid, s 961H.

   [15] Ibid, s 961J.

4. How this duty should be discharged when a client wants to limit the scope of advice is explained in ASIC Regulatory Guide 175. The substance of the duty is summarised as follows:

   Either you or your client can suggest limiting or revising the subject matter of the advice. However, you must use your judgment when deciding on the scope of the advice. You must determine the scope of the advice in a way that is consistent with the client’s relevant circumstances and the subject matter of the advice they’re seeking. After discussing the client’s reasons for seeking advice, you may identify that certain topics cannot reasonably be scoped out. If the client seeks to limit the scope of advice and you are unable to act in their best interests, you should decline to provide the advice.[16]

   [16] JJHSUBS, tab 2, 4-5. Referring: ASIC, Regulatory Guide 175:   AFS licensing: Financial product advisers—Conduct and disclosure (21 November 2024), 175.176, 175.286, 175.321.

5. AFSL holders can authorise others to provide financial services under their licence.

6. AFSL holders are responsible as between them and the client for the advice given by a person authorised to provide financial services under their licence.[17] AFSL holders must take reasonable steps to ensure that licensee’s comply with their obligations.

   [17] Corporations Act, 917B noting the carve out in 917D.

7. UGC was the holder of an AFSL. Mr Hewish was the sole director of UGC.[18] Each of the employees of UGC that provided financial product advice was an authorised representative of UGC and a provider of personal advice to UGC’s clients. UGC also authorised other corporate entities to provide financial product advice under UGC’s AFSL. Those entities included Integral Wealth Group Pty Ltd (‘Integral’), Wealth Rite Pty Ltd (‘Wealth Rite’) and Empire Wealth Group Australia Pty Ltd (‘Empire’). The employees of those companies were also providers of personal advice.[19]

   [18] T-Documents, T7.8, 1886-1890.

   [19] To the extent that his proposition is controversial I deal with it at [91] and [146] below

8. A provider cannot contract out of the conflict of interest obligations or the duty to act in the best interests of the client provided for in Part 7.7A of the Corporations Act.[20]

   [20] Ibid, 960A.

9. Financial services licensees must:

   (a)Do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; and

   (b)Have in place adequate arrangements for the management of conflicts of interest that may arise wholly, or partially, in relation to activities undertaken by the licensee or a representative of the licensee in the provision of financial services as part of the financial services business of the licensee or the representative; and

   (c)Take reasonable steps to ensure that its representatives comply with the financial services laws.[21]

   [21] See s 912A

10. Mr Hewish also had legal responsibilities arising from his role as sole director, responsible manager and key person at UGC.  In essence, it was Mr Hewish’s responsibility to ensure that UGC discharged its obligations which included taking reasonable steps to ensure that UGC’s authorised representatives complied with their obligations.

11. Having set out the obligations that frame the relationship between providers of financial services the next section sets out how the arrangements between UGC, its authorised representatives and its clients actually worked. The facts are largely uncontroversial but their regulatory significance is disputed. Consequently, it is convenient in this section to consider at various points whether particular conduct breached any of the requirements of the framework which I have just set out. Where a finding of fact is controversial, I have referenced the evidence on which I rely for making the finding.

    FACTS

12. In his early twenties, Mr Hewish began working in the financial services industry. In September 2011 he left his employer Fortrend Securities, and decided to set up his own private wealth management business. Starting with just six clients, four of them family, the applicant started UGC. He was the sole director.[22]

    [22] T-Documents, T7.8, 1886-1890.

13. From its inception in 2011 until 2017, Mr Hewish and the staff of UGC focused purely on building a private wealth firm. UGC specialised in providing comprehensive advisory services to its clients.

14. By 2017 UGC had approximately 50 clients who owned and operated SMSFs. UGC experienced difficulties with an external provider of administration services relating to SMSFs, so UGC decided to become more directly involved in SMSF administration, compliance and reporting. Even with the addition of this function, UGC remained a small business employing around five staff.[23]

    [23] Affidavit of Joel James Hewish made 1 November 2024 (‘First Hewish Affidavit’), [102].

15. In late 2017 a friend of Mr Hewish (Brett Dickinson) recommended to a business associate, Sean Niven, that he use UGC for SMSF administration services. Mr Hewish met with Mr Niven and decided that providing SMSF administration services to Mr Niven’s clients would help build his private wealth advisory business while creating an SMSF administration business of some scale.[24]

    [24] Ibid, [109]-[114].

16. By 18 August 2017 UGC had applied for and been granted an AFSL by ASIC. The licence granted did not allow UGC to issue securities.[25]  

    [25] T-Documents, T.71, 1844.

17. As the holder of an AFSL, UGC was obliged to comply with all of the statutory requirements that the Corporations Act imposes on the holder of an AFSL.

18. The client’s referred by Mr Niven were not coming to UGC for the purposes of obtaining comprehensive financial advice. Mr Hewish describes the relationship in the following terms:

    Sean’s clients did not require advice nor did they want advice. They simply wanted us to help them with the establishment of their SMSFs on an “execution only” basis and maybe help them with advising on some insurances once the SMSFs were established so they had their insurances structured appropriately between their existing super funds and new SMSFs.[26]

    [26] First Hewish Affidavit, [113].

19. The primary reason the clients wanted to set up an SMSF was so that they could invest in  real estate development funds set up in partnership by Sean Niven and real estate developer Paul Chiodo. The fund names included the words First Guardian Capital.

20. UGC started receiving its first referrals to set up SMSFs shortly after Easter 2018. Around the same time UGC employed Louis van Copenhagen to assist with the work that was expected to flow in from Mr Niven.

21. Mr Hewish and Mr van Copenhagen discussed how the services should be delivered. Mr Hewish was conscious that UGC needed to meet its obligations as licence holder when providing financial services but wanted to ensure that the services were delivered cost effectively and efficiently to the referred clients in circumstances where the client did not want or need personal or comprehensive advice.

22. Mr Hewish decided that the clients would be accepted on what he has variously described as an ‘Execution Only’ basis or a ‘Limited Advice’ basis or a ‘Scoped Advice’ basis. In essence, the goal was to establish an arrangement with the client where no advice was contemplated or given in relation to the wisdom of setting up of an SMSF and making the real estate fund investment proposed.[27]  In particular, Mr Hewish was keen to structure the arrangements so that there was no obligation to advise the client on whether the proposed investment was in their best interests. The proposal was that UGC would just provide a service that did the administrative work necessary to set up the SMSF and then advice would be given on:

    (a)how much to rollover from the client’s existing superannuation fund to the new SMSF;

    (b)the structure of insurances as between the two superannuation funds and the client personally;

    (c)estate planning arrangements for the existing superannuation fund and the new self-managed superannuation fund; and

    (d)the investment of any surplus capital which the client wished to be rolled over from their existing superannuation fund to their new self-managed superannuation fund which was not to be invested in the chosen investment.[28]  

    [27] Ibid, [121]-[123].

    [28] Transcript of Proceedings, Hewish v Australian Securities and Investments Commission, (Administrative Review Tribunal, ART2024/3838, Deputy President O’Donovan, 24 March 2025 – 27 March 2025), 51, 54. (‘Transcript – Part 1’)

23. In Mr Hewish’s mind, this arrangement was fair and appropriate given the relatively low fees that were being charged to the client and, critically, the client had already decided to make the investment before they became a client of UGC. In Mr Hewish’s mind, the clients were not coming to UGC to get advice on whether the investment was a good idea in their particular circumstances.[29]

    [29] Ibid, 40, 73. Transcript of Proceedings, Hewish v Australian Securities and Investments Commission, (Administrative Review Tribunal, ART2024/3838, Deputy President O’Donovan, 2 June 2025 – 5 June 2025), 300. (‘Transcript – Part 2’)

24. It was at this point in time that UGC began developing the documentation to implement this model which I will refer to as the ‘Limited Advice Model’. This documentation was provided to the prospective client by the work referrer before they ever met with anyone from UGC.

25. The paperwork was problematic from the beginning. It was not prepared with the benefit of legal advice. It reflected Mr Hewish’s assessment of what was fair but had specific problems with it. In particular, it purported to characterise the interactions that were to follow as not including personal financial advice.[30] The documents also sought to contract out of particular obligations. Mr Hewish’s view is that framing the relationship with the client in this way is permissible under the Corporations Act and having regard to ASIC guidance,[31] which in the particular circumstances of the Niven referrals, may be right. I don’t need to form a view about that.

    [30] JJHSUBS 4, tab 1, 1; tab 3, 11.

    [31] Transcript – Part 1, 58.

26. Once the paperwork was completed by the referred client and submitted to UGC, the client was followed up with a welcome phone call which was the first contact between the client and UGC.[32] The purpose of the system was to make clear what the client was receiving advice about and what the client was not receiving advice about.

    [32] First Hewish Affidavit, [157]-[158].

27. Even at this early stage, when a client who had been sold on an investment by a third party was coming to UGC to execute the arrangement, there were doubts about whether UGC was discharging the obligations it owed as a financial adviser to the client. In particular, the duty to act in the best interests of the client was an issue – see ASIC Regulatory Guide 175.[33] UGC as an AFSL holder still had obligations that meant that unless the client was prepared to pay for advice about what was in their best interests following a review of the desirability of the product and the move to an SMSF, then UGC may have been obliged to reject them as a client.

    [33] Transcript – Part 2, 95. JJHSUBS, tab 2, 4-5. Referring: ASIC, Regulatory Guide 175:   AFS licensing: Financial product advisers—Conduct and disclosure (21 November 2024), 175.176, 175.286, 175.321.

28. Mr Hewish was confident that his obligations did not extend that far. In his mind UGC was appropriately narrowing the scope of financial product advice to be given with a view to facilitating the client’s instructions.

29. Mr Hewish considered, and considers, that scoped advice is an acceptable practice in the industry.[34] There are clearly advantages to a client who wants to independently make up their own mind about their financial affairs and wants an AFSL holder to execute their wishes. It is however clear that when operating in this manner, the AFSL holder needs to keep a close eye on their duties and is ensuring that the client genuinely understands how limited the relationship is.

    [34] Transcript – Part 1, 58.

30. Given that Mr Hewish’s approach adopted in relation to referrals from Mr Niven has a kind of intuitive sense to it and, in his mind, it was clear that the clients were only coming to UGC after the client had already made a decision to invest in a particular product through an  SMSF, the breaches of the Corporations Act that may have arisen at this point, while more than technical may not warrant severe regulatory action. A banning order may not be appropriate for any breaches arising from this early conduct and my decision to impose a banning order does not rely on any breach of the Corporations Act in this phase of UGC’s development.

31. However, as events unfolded, Mr Hewish’s utilisation of the Limited Advice Model expanded to transactions where it was more obvious that duties were owed, and those duties could not be escaped by utilisation of the Limited Advice Model.

32. In late 2018, the client referrals coming from Mr Niven jumped to four to six referrals a week. This increase was the result of Mr Niven working with Empire, which began marketing Mr Niven’s investment fund.[35]

    [35] First Hewish Affidavit, [163]-[165].

33. In early 2019 two of Empire’s employees, Darren Pattison and Niomi Kahika, advised Mr Hewish that they were planning to leave Empire and copy its business model promoting the same investment fund. They advised Mr Hewish that they were contacting him for the purpose of ensuring that UGC would take referrals from their new business. They also indicated that they were interested in their company becoming a Corporate Authorised Representative under UGC’s AFSL.[36] The business needed this, otherwise the new company could not provide financial product advice.

    [36] Ibid, [166]-[168].

34. Mr Hewish decided to authorise Mr Pattison and Ms Kahika and their company Integral for ‘General Advice Only’ provided they completed sufficient training in accordance with ASIC’s Regulatory Guide 146.

35. Provided Integral stuck to giving general advice, it was not required to comply with obligations concerning Statements of Advice and acting in the best interests of the client.

36. It is unclear how much Mr Hewish knew about the proposed business and how it was to generate clients, but on his account, he understood that referrals would originate from a close associate of Mr Pattison who was promoting real estate investment in Queensland. Mr Pattison maintained a list of prospective clients that had shown a recent and active interest in real estate investing via their superannuation fund but had not proceeded with buying an investment property. This list gave Integral their leads for making calls to identify potential investors.[37]

    [37] Ibid, [170].

37. Integral began generating limited advice clients for UGC soon after establishment. Integral was still promoting Mr Niven’s products, the First Guardian funds.[38] The material difference in the arrangement was that Integral were doing so under UGC’s AFSL. It appears not to have crossed Mr Hewish’s mind that there might be a difference in the compliance approach required when providing a limited service to a new client, referred by a firm that is operating at arm’s length, and the approach required where the marketing to the client is being done by a firm operating under UGC’s AFSL with the intention of referring that client to UGC to provide a limited advice service.

    [38] Transcript – Part 2, 100.

38. Only limited changes were made to the paperwork which was used to onboard the limited advice clients to UGC from Integral and as a consequence the documents made representations that were confusing. For example, the claim made by UGC in the documentation ‘[Integral] and UGC are completely separate and distinct legal entities and are in no way legally connected’ was untrue. The document did however go on to explain that Integral was operating under UGC’s AFSL.[39]

    [39] T-Documents, T7.86, 3688.

39. Mr Hewish never reflected seriously on the fact that clients were now being solicited by a firm operating under UGC’s AFSL. UGC could not simply assume that Integral was behaving appropriately. UGC was responsible for the conduct of its representatives, whether or not the conduct was within authority.[40]  The carve out in s 917D that relieves the AFSL holder from responsibility for unauthorised conduct did not come in to play simply because it was noted in complex documentation that Integral was only authorised to provide General Advice. UGC needed to engage with the question whether what Integral and its representatives were doing was giving General Advice or was in fact Personal Advice being provided outside the scope of the authorisation. Given the closeness of the relationship between Integral and UGC, it was well within the power of Mr Hewish to consider and answer this question.

    [40] Corporations Act, s 917B.

40. As Integral referrals to UGC got into full swing, Mr Pattinson then approached Mr Hewish with a proposal. Integral wished to stop promoting the First Guardian funds and replace them with an investment vehicle that was exclusive to Integral. Mr Hewish and his friend Mr Dickinson had been involved in property developments previously, so Mr Dickinson and Mr Hewish decided to establish their own investment vehicle with a view to this being marketed by Integral.[41]

    [41] The First Hewish Affidavit, [170]-[172].

1. The vehicle they created is sometimes referred to as a fund, but was in fact an unlisted public company, GCPF. Mr Hewish was a director and a minor shareholder.[42] Its goal was to raise capital and invest that capital in property developments. It was successful in raising capital and it invested the raised capital in special purpose vehicles that undertook property development.

   [42] Affidavit of Susanne Julie Harris dated 9 September 2024, [59]. (‘First Harris Affidavit’)

2. GCPF was registered on 15 August 2019. A few months later, on 10 December 2019, GCPF Management Pty Ltd (‘GCPF Management’) was also registered. GCPF Management was set up to manage the capital held by GCPF. Mr Hewish was a director of GCPF Management, and together with and his wife, ultimately held 25% of the share capital.[43] GCPF Management earned fees in exchange for managing the fund. From July 2021 until GCPF was wound up, GCPF Management earned over $4 million in fees.[44]

   [43] Through Hewish Capital Pty Ltd, a company controlled by Mr Hewish, in which him and his wife are equal shareholders.

   [44] First Harris affidavit, [218]-[223].

3. The size of the fee paid by GCPF to GCPF Management increased as the amount of capital raised by GCPF increased. The more money invested in GCPF, the higher the fees paid for management.  This meant that Mr Hewish stood to gain personally whenever Integral, operating under UGC’s AFSL, persuaded a person to invest in GCPF. Again, it appears that Mr Hewish never turned his mind to the conflict of interest this particular structure might create. When he did turn his mind to it in the context of these proceedings, he seemed unable to see that there was a problem.[45]  

   [45] First Hewish affidavit, [180]-[182].

4. In late 2019, Integral agreed to devote its efforts to raising capital for GCPF.[46]

   [46] Ibid, [176].

5. Integral then developed a business model for attracting clients to the GCPF investment through SMSFs and referring them to UGC to complete the process. It is unclear how much Mr Hewish personally knew about the practices engaged in by Integral, but a few things can be said with certainty:

   (a)Mr Hewish, as responsible manager,[47] at UGC needed to take an interest in Integral as an authorised representative of UGC. He needed to ensure that it operated within the limits of its authority. It was only authorised to give general advice. If it was giving customers personal advice, then it needed to be stopped or the fact that personal advice was being given without authority disclosed to the client in a clear way. UGC was required to monitor the ongoing performance of Integral and other authorised representatives;[48]

   (b)[REDACTED][49]

   (c)[REDACTED][50]

   (d)[REDACTED]

   (e)[REDACTED]

   [47] ASIC through ASIC, Regulatory Guide 105:   AFS licensing: Organisational competence (23 June 2022). (‘RG 105’). RG 105 uses this concept to assess compliance with s 912A of the Corporations Act which requires licensees to maintain competence to provide financial services.

   [48]ASIC, Regulatory Guide 105:  AFS licensing: Meeting the general obligations (23 June 2022), 104.36. (‘RG 104’)

   [49] Transcript – Part 2, 210-211. T-Documents, T7.206, 6644-6645.

   [50] Transcript – Part 2, 170, 196; Exhibit A8.

6. It is unclear whether Mr Hewish knew in 2020 and 2021 the way in which Integral was generating leads or from what source, but he did know that the approaches from Integral would generate the need for services to set up an SMSF, which implies that he knew that customers who presently did not have an SMSF were being approached.

7. I am satisfied that the business model adopted by Integral had the following elements.

8. First, Integral would purchase leads from a company that harvested contact details. The harvesting would be done by running a free competition on the internet. When a person entered the competition they had a small chance of winning an iPhone or something of similar value. To enter, a person needed to give over their personal details and tick a box agreeing to privacy terms and conditions that allowed the sharing of those details. The company would use responses to generate contact lists which they would sell.

9. Having purchased a list of leads, Integral would usually outsource the cold calling of the person whose contact details they had acquired.

10. [REDACTED]

    [REDACTED][51]

    [51] T-Documents, T7.64, 3601-3602.

11. Provided it was a third party and not Integral calling it was, strictly speaking, true that the company was not trying to sell the target anything at that point. However, it is clear that if certain criteria were met, then the person’s details would be passed on to Integral for a more concerted approach. The person would only be approached by Integral if they were a certain age, had a certain income and had a certain superannuation balance.

12. [REDACTED][52] [53]

    [52] Ibid, T7.54, 3571-2.

    [53] Transcript – Part 2, 210-211. T-Documents, T7.206, 6644.

13. [REDACTED]

    [REDACTED][54]

    [54] Ibid, T7.54, 3571-3571.

14. [REDACTED]

15. [REDACTED][55] [56]

    [55] T-Documents, T7.52, 3555-2564.

    [56] Marked ‘annexure A’ to the reasons.

16. [REDACTED]

17. [REDACTED]

    (a)[REDACTED]

    (b)[REDACTED]

    (c)[REDACTED]

18. Taken together, these statements suggest that the target is not receiving personal advice from Integral. This is said in circumstances where what Integral is providing is financial product advice - ie. expressing opinions intended to influence the target in relation to a particular financial product, and, that advice is being given in circumstances where Integral has considered the target’s financial situation or a reasonable person might expect them to have considered those matters – remembering that the target understands that they are talking to a ‘super specialist’ who is considering how well their superannuation fund is performing and other alternatives. This expectation renders the advice personal advice.

19. It does not matter that Integral is going to recommend investing in GCPF through an SMSF to anyone with significant superannuation balances. The test is whether a reasonable person might expect the provider to have considered one or more of the person’s objectives, financial situation and needs. [REDACTED], I am satisfied that that is what a reasonable person might expect. [REDACTED]. I do not accept that submission. Having commenced the series of calls with a claim that the call is not about selling something, and having represented that the person giving the presentation is a super specialist rather than a sales representative for GCPF, targets would have expected that they were receiving advice targeted at their financial situation and needs.

20. [REDACTED] Consequently, despite what it said at the start of the presentation, Integral was engaged in giving personal advice. Integral should not have suggested otherwise and should have complied with its obligations imposed by the Corporations Act when doing so.[57] In particular, Integral should have prepared a statement of advice in compliance with the requirements of the Corporations Act. Mr Hewish, as the key personnel and sole director of UGC, who was across what was being said, should not have authorised the presentation in that form by an authorised representative.

    [57] See ss 946A, 961B, 961G, 961H, 961J.

21. [REDACTED]

22. [REDACTED]

23. [REDACTED][58] [59]

    [58] [REDACTED]

    [59] T-Documents, T7.38, 2455.

24. [REDACTED]

25. [REDACTED]

26. [REDACTED][60] [61]

    [60] T-Documents, T7.196, 6458-6459. Transcript – Part 2, 210-211. T-Documents, T7.206, 6644-6645

    [61] T Documents, T7.63, 3590-3600.

27. [REDACTED]

    [REDACTED][62]  

    [62] Ibid, 3597.

28. [REDACTED]

29. [REDACTED][63] [64]

    [63] Transcript – Part 1, 41, 125-127.

    [64] Westpac Securities Administration Ltd v Australian. Securities and Investments Commission [2021] 270 CLR 118, 129.

30. [REDACTED]

31. Unlike Integral, UGC had no basis at all for claiming that it could not provide personal financial advice. It was a financial advisory firm with an AFSL. It had many clients that it provided advice services to. If it took on the clients referred to undertake investments in GCPF and it had to give personal advice, it had immediate conflicts. The sole director of UGC would be earning management fees off any investment in GCPF through his shareholding in the management company. Further, if UGC had to give advice on the quality of the investment in GCPF, it is difficult to see how a responsible financial adviser could recommend that a person move money out of a solidly performing superannuation fund into an SMSF followed by an investment into GCPF. When costs, uncertainty, lack of liquidity and investment concentration are considered it is difficult to see how a provider of financial product advice could recommend an investment in GCPF through an SMSF.

32. For a start, Integral would immediately earn a 3% + GST fee if the investment proceeded. This turned into a 3.3% reduction in the target’s capital as soon as the investment was processed.[65] Second, the target was also going to incur set up costs of over $3000 to establish an SMSF with ongoing costs of almost $2000 a year to maintain.[66] The investment into GCPF was the purchase of illiquid shares in a single public company with little or no investment history behind it. The investments were going to be into property development which, in May 2020, it was unclear whether it would be disproportionately affected by the global pandemic that was unfolding at the time.

    [65] Transcript – Part 2, 175.

    [66] T-Documents, T7.84, 3681; T7.91, 3763.

33. In these circumstances I am satisfied that whether investing in GCPF through an SMSF was prudent is a question that could not be scoped out of the advice in a way that was consistent with the obligation to act in the best interests of the client. At this point the Limited Advice Model needed to be reconsidered and, in all likelihood, abandoned.

34. [REDACTED]

35. [REDACTED]

    [REDACTED][67]

    [67] First Hewish affidavit, [180]-[182].

36. In essence Mr Hewish’s confidence that the marketing system he implemented was consistent with the regulatory framework depended on three things. First, that UGC and Integral were sufficiently separate to avoid problems of conflict arising from Mr Hewish’s interest in attracting funding to GCPF. Second, Integral was only giving general advice so it had no obligation to act in the best interests of the client. Third, by the time UGC advisers became involved, the client had already made a definite decision to invest in GCPF through an SMSF and so executing their instructions did not involve a conflict.

37. Those conclusions if genuinely held, were nothing more than wishful thinking.  UGC and Integral were not completely separate. Integral was an authorised representative of UGC. [REDACTED]

38. Integral did not just give general advice. It’s representatives gave personal advice for reasons already explained.

39. [REDACTED]

40. In reality, Mr Hewish was very concerned that the changes that were evolving in the Limited Advice Model rendered the model non-compliant.

41. Mr Hewish describes his thought processes in his affidavit. By late 2019, he was clearly concerned that his duties to his client would make the business model he was about to use to market investments in which he was centrally involved non-viable. Particular concerns arose because the Financial Adviser Standards and Ethics Authority Ltd (FASEA) Code of Ethics was about to commence. Mr Hewish read the Code and the Financial Planning Association’s (‘FPA’) guidance note. The note addressed the concept of ‘scaled advice’. Scaled advice refers to personal advice that does not cover all possible topics relevant to the client. The FPA’s guidance on giving scaled advice was as follows:

    You should take into account your client’s express wishes, including in relation to scaling your advice, but these do not override your duty to give advice that is in your client’s best interests. You cannot follow your client’s wishes if it is not in your client’s best interests to do so. This includes consideration of your client’s broader, long term interests and likely future circumstances…Upon investigation of the client’s circumstances, integrity may require the Member to discontinue a limited scope engagement and instead offer comprehensive financial planning services to the client. Should the client decline such further services, professional integrity may require the Member to discontinue the engagement…[68]

    [68] JJHSUBS, tab 4,

42. Mr Hewish understood this as meaning that you should take into account your client’s express wishes, including in relation to scaling your advice, but these do not override your duty to give advice that is in your client’s best interests. You cannot follow your client’s wishes if it is not in your client’s best interests to do so.[69]

    [69] First Hewish Affidavit, [197].

43. In understanding his legal obligations in that way Mr Hewish is correct. However, having reached the correct conclusion as to what the duty required of a financial adviser, he interpreted it as follows:

    [REDACTED][70]

    [70] Ibid.

44. As explained further below, UGC could never be satisfied that a person had made a definite decision to invest in GCPF through an SMSF at the point of referral. To that point Mr Hewish believed (or says he believed) that they had only received general advice and received that advice from a person Mr Hewish knew would earn significant fees if they persuaded the client to proceed with a very particular investment. To treat the client as having already made up their mind having received only a general presentation with many disclaimers [REDACTED] involves at the very least, wilful blindness on the part of Mr Hewish as to what has happened to that point. At the very least there is an absence of fair dealing with the client that puts UGC in breach of s 912A(1)(a) of the Corporations Act and its obligation to ensure that financial services are provided fairly.

45. Even if the target had had made up their mind, UGC already knew that the investment they were making was a high fee, illiquid investment that may not even match the returns the target was getting in their existing superannuation fund. [REDACTED] Consequently, proceeding with the engagement meant that UGC was pursuing the interests of its principal and the interests of the authorised representative that had enticed the target to invest in the product, rather than pursuing the best interests of the client.

46. But even the premise that the target had made a definite decision to invest in GCPF through an SMSF at the time of transfer to UGC is doubtful. It is clear from the documentation available, that UGC could never be confident that a definite decision had been made to set up an SMSF and invest in GCPF.

47. [REDACTED]

48. [REDACTED]

49. It is critical to UGC’s avoidance of its duties to the client that it can assert that they have already decided to invest in GCPF through an SMSF. To assist with this claim, the target is verballed in various documents presented to them by Integral. These documents assert that a decision has already been made. I discuss this phase in more detail in the context of specific clients.

50. [REDACTED][71] Significantly, the calls from UGC advisers also included further false representations – for example, suggesting that one of the benefits of an SMSF is that it allows investment into the ‘wholesale fund that you are looking to invest into’.[72] GCPF was not a wholesale fund. It was a public company which any member of the public with sufficient capital could purchase shares in. Thus, rather than acting on an execution only basis, UGC sought firm up the decision of the target to proceed with the investment, including by perpetuating deceptions that had been introduced into the mind of the target by Integral.

    Introduction of the Benefit Analysis

    [71] T-Documents, T7.80.

    [72] ibid

51. Despite his claimed confidence in the legitimacy of the Limited Advice Model, Mr Hewish felt compelled to make some changes to it at the start of 2020.

52. Mr Hewish decided that in order for his advisers to meet more onerous obligations that would arise when the FASEA Code of Ethics commenced in January 2020, some attempt should be made to ensure that UGC was not ‘blindly accepting Execution Only instructions that would put a client into a worse position. [UGC] also needed to ensure that the advice that we were being engaged to provide considered broader aspects of the client’s affairs.[73]

    [73] First Hewish Affidavit, [197].

53. In January 2020 UGC decided to tweak how it delivered the Limited Advice Model. Those tweaks in substance accept to a degree that personal advice was being given and that something needed to be said to clients about their decision to invest in GCPF through an SMSF. However, rather than accept that proper advice, discharging all of a financial adviser’s statutory duties needed to be given, UGC opted for a model that can be described as falling between two stools. UGC never quite committed to an execution only engagement where nothing was said about the GCPF investment, but equally it never quite embraced its obligation to give financial advice that was in the client’s best interests or which acknowledged the conflict of interest.

54. Instead a ‘benefit analysis’ was introduced as a way of ensuring that transactions were not executed for clients where it was obvious that the transactions were not in their best interests, [REDACTED][74]

    [74] Ibid, [206].

55. Mr Hewish says the details of the process he was to implement to ensure legal duties were discharged was determined with input from his lawyer. That appears to be true. But the legal input was limited. It never extended as far as getting formal legal advice.

56. The problem with the benefit analysis was that it was not and did not discharge the duty to act in the client’s best interests. Its purpose was to ensure that the investment proposed was not self-evidently harmful to the client’s interests. [REDACTED]

    [REDACTED]

57. As we will see later when the client files are examined, the advisers thought they were discharging the best interest advice obligation when producing statements of advice. However, on Mr Hewish’s view of the world, the advisers were meant to be executing decisions already made by the client and refusing instructions if the benefit analysis indicated that the client would be worse off.

58. In practice this meant that Mr Hewish was happy for UGC advisers to implement a client’s instructions in relation to investing into GCPF with the result that:

    (a)his associates at Integral would take significant upfront fees from a client’s superannuation;

    (b)he and other business associates would earn a management fee out of that superannuation for the foreseeable future; and

    (c)For UGC to earn SMSF set up fees and administration fees from a client

    if there was ‘a reasonable chance’ of the client getting a better outcome as compared with staying where they were.

59. Rather than considering what was in the client’s best interests, it was possible for UGC to implement transactions in Mr Hewish’s interests provided it wasn’t obviously harmful.

60. It is doubtful that the benefit analysis as implemented was sophisticated enough to pick up when executing the proposed investment was harmful. As implemented it was an analysis that ignored reality. It took for the most part the real performance of funds and compared them with the non-existent performance of a product with no history of returns. It ignored the liquidity and diversity inherent in the APRA regulated superannuation funds and treated an illiquid, narrow investment as equivalent. No alternative products were suggested or considered.

61. It is clear that for some clients the result of the benefit analysis is that they were advised not to proceed with the investment.[75] Other clients, who passed the very low threshold of the benefit analysis, were provided with the information and told that they would be better off proceeding as proposed, despite sometimes having recent superannuation earnings of up to 20% per annum in arrangements that attracted much lower fees.

    [75] Transcript – Part 2, 281.

1. [REDACTED]

   2020 Launch of GCPF

2. Having revised the Limited Advice Model in ways that he hoped would accommodate the conflicts arising from referrals from Integral, Mr Hewish with his fellow directors sought to finalise the prospectus for GCPF. Early versions of the prospectus had stop orders placed on them by ASIC.

3. Since March 2020, GCPF has issued three prospectuses and four replacement prospectuses through which it has sought to raise capital. Each prospectus identified a target rate of return of 13% after fees and described the investment as ‘highly speculative’.

4. Mr Hewish contested this description of the product during the hearing and sought to establish that the investment involved well secured investments with limited downside risk. For present purposes, I am prepared to accept that GCPF was probably misdescribed as a highly speculative investment in the prospectus. The downside risk was probably too low to be highly speculative as was any potential upside. It is difficult to understand why Mr Hewish believes that establishing that he knowingly misdescribed the investment in a prospectus assists his case.

5. Ultimately, the returns on the projects invested in were mixed and overall returns modest even prior to ASIC intervention.

6. Integral developed plans to establish a Financial Advice business and in April 2020 Integral Advisory Solutions (‘IAS’) became a Corporate Authorised Representative operating under UGC’s licence. In early April, Empire became a corporate authorised representative of UGC operating under its licence.

7. Integral and Empire were authorised to provide General Advice. IAS was authorised to provide personal advisory services and focussed on servicing retail superannuation clients.

8. UGC collected revenue on behalf of Integral, IAS and Empire. From the revenue collected UGC deducted a licence fee of approximately 10% of the sum taken out of the client’s capital. The remainder was remitted to the referring businesses. The 10% fee was to cover the costs of monitoring the firms operating under UGC’s licence and a contribution to professional indemnity insurance costs. The payments made to the firms were ‘essentially their businesses revenue for the services they provided.’[76] These fees were not referral fees paid by UGC. Mr Hewish contends that they were fees for the service the businesses rendered to the clients who were referred to UGC.

   [76] First Hewish Affidavit, [227].

9. If that characterisation is accepted, then Integral and Empire were earning large fees (3.3% of a client’s superannuation balance transferred into the investment they were marketing) for providing advice to clients to invest in products associated with Mr Hewish.

10. There is no difficulty with UGC collecting fees on behalf of its authorised representatives. However, there is a difficulty if the license holder knows that the authorised representative are earning significant fees from clients but doesn’t know whether the authorised representative is complying with its legal obligations – and in particular is giving financial advice that is not in the best interests of the client.

11. [REDACTED][77]

    [77] Transcript – Part 1, 203

12. Through the course of 2020, Wealth Rite and Wealth Rite Advice were added as authorised representatives under UGC’s AFSL.

13. Wealth Rite was owned by Chris Pappas Jnr through various entities connected to him. Wealth Rite provided the database of people interested in investing in property to help launch Integral’s initial marketing activities. Mr Hewish believed that it was Wealth Rite’s prospective investors who were being approached to invest in GCPF.[78]

    [78] First Hewish Affidavit, [231].

14. The move to place Wealth Rite on UGC’s AFSL and then create Wealth Rite Advice subsequent to that, was the result of Integral’s founders, Darren Pattison and Niomi Kahika splitting as a couple.  Niomi Kahika moved to Wealth Rite and Wealth Rite Advice.[79]

    [79] Ibid, [232].

15. This was a period of significant growth for UGC. It grew from a staff of 5 in 2017 to a staff of 50 in 2020. UGC produced $10,268,910 in revenue that year much of which was passed through to corporate authorised representatives.[80]

    [80] Ibid, [235].

16. The staff employed included additions to the compliance department including experienced compliance staff Tracey King, Mina Nguyen, Christy Wang, Tony Mucha and Edward Gribble. By the end of 2020, UGC was spending $597,550 on compliance. UGC was also obtaining a significant amount of advice from Hope Earl lawyers which was costing tens of thousands of dollars. All up UGC was spending almost 10% of its total revenue on its compliance team and a significant amount on oversight of the corporate authorised representatives.[81]

    [81] Ibid, [237]-[241].

17. [REDACTED][82]

    [82] Ibid, [246].

18. That is troubling to consider when what was occurring was that clients were being charged over $5000 by UGC and its authorised representatives for the privilege of being marketed into a product that no-one operating under UGC’s AFSL had ever determined was in their best interests. The breach of duty is obvious. If more witnesses had been called, it may have been possible to determine how it was that people who were being paid to ensure compliance with professional responsibilities allowed a system that self-evidently fell short to persist and grow, but the information I have available is limited.

19. For present purposes it is sufficient to note that at least on paper UGC took steps to ensure compliance with legal obligations and those steps were ineffective. I accept that to criticise Mr Hewish as taking a ‘cavalier attitude towards compliance’ is unfair. [REDACTED]

20. Mr Hewish in his evidence explains his view in the following terms:

    [REDACTED][83]

    [83] Ibid, [247]-[250].

21. For present purposes I am prepared to proceed on the basis that this accurately describes Mr Hewish’s state of mind at the time. As an approach it conveniently ignores the fact that prior to dealing directly with UGC, the client has dealt with an authorised representative of UGC who has persuaded the client to make the decision to move to an SMSF and invest in a product promoted by UGC or entities associated with UGC. At the very least Mr Hewish and those around him, chose to ignore the reality that advice was being given to invest in GCPF by people who were aware of the financial circumstances of the people they were engaging with.

22. In relation to the corporate authorised representatives, Mr Hewish said that he instituted Weekly Operations & Compliance Meetings.[84] Whether these meetings canvassed the marketing techniques and duties of the authorised representatives was not the subject of detailed evidence.

    [84] Ibid, [251].

23. While face to face meetings between the corporate authorised representatives and UGC could not take place during most of 2020 due to COVID lockdowns, in late 2020 10 UGC staff visited the Gold Coast where the corporate authorised representatives were based. Extensive training and compliance workshops were conducted with all corporate and individual authorised representatives for several days.[85] Details about this training is not available in the evidence.

    [85] Ibid, [253].

    2021 and ATO Issues

24. In 2021, the ATO’s auditing practices changed which resulted in significant delays in the processing of ABN applications which are essential to the setting up of SMSFs. UGC paid fees upfront for its clients and then took its payment and the payment on behalf of the authorised representatives when the SMSF was up and running. Delays in ATO approval created cashflow issues for both UGC and its corporate authorised representatives.

25. This soured relations with the corporate authorised representatives and resulted in redundancies at UGC. UGC’s Execution Only referrals through 2021 were down around 70% in volume from the peak in late 2020. Mr van Copenhagen was let go. Another adviser, Mr Videkanic was made head of the Limited Advice side of the business and reported directly to Mr Hewish from June 2021.[86]

    [86] Ibid, [263]-[264].

26. A further ten staff were made redundant in September 2021. Empire had all but ceased referring clients to UGC. Integral and Wealth Rite were also down on their referrals.[87]

    [87] Ibid, [266]-[268].

27. By late 2021, the senior leadership team and compliance committee consisted of Mr Hewish, Sonia Ambwami, Mechel Eagar, Jovan Videkanic, Nadia Rooman, Edward Gribble, Joshua Lane and Kirrily Fry.

28. By September 2021 IWG, IAS, Wealth Rite and Wealth Rite Advice had all been removed from UGC’s AFSL and were no longer corporate authorised representatives. By early 2022, approximately 80% of all external third party corporate authorised representatives were off UGC’s AFSL. By the end of February 2022, the Limited Advice Model was, to use the words of Mr Hewish ‘nearing its death’ and by November 2022 it had ceased entirely.[88]

    [88] Ibid, [273].

    ASIC Case Studies

29. ASIC provided information about a number of clients who received advice from UGC after being drawn into considering whether to move their superannuation balance to an SMSF and then invest in products associated with UGC. The files covered clients who dealt with UGC between September 2020 and May 2022.

30. I have chosen five client files to summarise to ensure that clear findings on breach can be made.

    ALB

31. On 29 September 2020, ALB signed a referral agreement and an advice proposal in which he agreed to receive advice from UGC.

32. ALB was a referral from Integral. At that stage Integral were operating as a corporate authorised representative under UGC’s AFSL and were authorised to give general financial product advice. I am willing to infer that the call from Integral took place between June and September 2020. The information about how ALB was induced to connect with UGC is patchy, but I am satisfied that he was identified as a potential candidate either because he had entered his details in an online competition or had expressed an interest in property investments. Having been the subject of a call that obtained enough detail from him to confirm that he had significant funds in superannuation, [REDACTED].

    [REDACTED]

33. [REDACTED]

    (a)[REDACTED]

    (b)[REDACTED]

    (c)[REDACTED]

    (d)[REDACTED]

34. [REDACTED]

35. [REDACTED]

    [REDACTED]

36. [REDACTED]

37. [REDACTED]

38. [REDACTED]. During that call or immediately following ALB signed the following documents.

39. First, a service agreement with Integral.[89] This agreement obliged ALB to pay a client service fee of 3% + GST ‘when funds are invested into Global Capital Property Fund Ltd’. The engagement of Integral was ‘for the purpose of organising, arranging and referring [ALB] to’ GCPF’. The service agreement stated, ‘The applicant hereby understands [Integral] are not offering financial advice but merely arranging and facilitating an investment in the stated investment on your behalf’. It also included the following:

    The applicant authorises [Integral’s] Australian Financial Service Licensee, United Global Capital Pty Ltd (UGC), AFSL:496179, ABN: 25 154 158 273, to deduct any fees payable for the provision of [Integral’s] service fee from their Self-Managed Superannuation Fund (SMSF), upon the investment being made.

    [89] T-Documents, T7.85, 3686.

40. [REDACTED]

    [REDACTED][90]

    [90] First Hewish affidavit, [228].

41. [REDACTED]

42. With UGC’s knowledge and co-operation, Integral was providing very expensive personal advice that was not in the client’s best interest and, in relation to which, Integral and the representatives were hopelessly conflicted. UGC knew this and was legally responsible for it. Rather than stopping it, UGC co-operated with it and facilitated it.

43. UGC’s co-operation in the arrangement was essential. UGC knew that Integral was being rewarded for persuading ALB to invest in GCPF, rather than providing advice in the best interests of ALB. Integral earned its fee by delivering an investor to GCPF.[91] [REDACTED]

    [91] Transcript – Part 2, 173-174.

44. The next document signed by ALB was a Self-Managed Super Fund Establishment & Statement of Advice Proposal.[92]  

    [92] T-Documents, T7.84.

45. This document outlined the scope of advice that UGC was to provide. It included:

    (a)  Identification of lifestyle and financial objectives and the time frames to achieve those objectives;

    (b)  Review of current superannuation arrangements and appropriateness of current arrangements to meet desired outcomes.

    (c)   Establishment of a compliant and documented investment strategy for your new self-managed superannuation fund.

46. The documents goes on to say:

    Our advice development process is consultative in nature and one where the recommendations developed will be so following close and ongoing consultation with you. In doing this, we ensure that the advice is specific in nature and serves your best interests.

    While the advice contained in the Statement of Advice will be provided to serve your best interests, you are under no obligation to accept the recommendations contained within it and have the right to reject any or all of the recommendations.[93]

    [93] Ibid, 3678.

47. The document then goes on to describe a very orthodox approach that will be taken for preparing the statement of advice.

48. There is nothing in the document which suggests that advice will be prepared on the basis that a decision has already been made to invest in GCPF, nor does the document say that UGC will not consider whether such an investment is in ALB’s best interests. Consequently, the document is misleading.

49. ALB then signed an Authority to Provide Contact Details & Engagement Acknowledgment United Global Capital (UGC).[94]

    [94] Ibid, T7.68.

50. It contained the following statements:

    1.[Integral] and UGC are completely separate and distinct legal entities and are in no way legally connected. Neither company nor its directors has a financial interest in the other.

    2.Integral and UGC’s association extends to the referral of clients to one another for the provision of services in circumstances where the referrer does not have the capacity, training or legal authorisation to provide such services in its own right and the licencing of [Integral] to conduct its financial services business under Australian law.

    3.UGC is the holder of Australian Financial Services Licence No. 496179. Under Australian law UGC is able to authorise companies and individuals who it deems to have the appropriate experience and education to provide financial services under its licence. UGC and [Integral’s] relationship under this arrangement extends only as far as a contract service provider with respect to this association.

    4.…

    5.[Integral] is authorised under UGC’s licence to provide General Financial Advice, otherwise known as General Product Advice.

    6.UGC may pay [Integral] fees for promoting the services of UGC and [Integral] may pay UGC fees for promoting the services of [Integral].

    7.Neither UGC or [Integral] make any representations as to the appropriateness or suitability of a Self-Managed Superannuation Fund (SMSF) for your individual financial circumstances.

    8.Any advice provided to you by UGC will initially be limited to the effective and appropriate rollover of benefits to your new SMSF.

    9.Any product introduced or recommended to you by [Integral] is not a product of UGC, nor is it an endorsement of its appropriateness to your circumstances. However, the directors of [Integral] and UGC and its connected entities do have a financial interest and Joint Venture partnership with respect to Global Capital Proper Fund Ltd.

    10.Any decision to invest in products introduced to you by [Integral] will be yours alone independent of any discussion you have with UGC and [Integral]. You acknowledge that any financial product discussion with UGC will be in the nature of General Product Advice only and not Personal Advice, which takes into consideration your individual circumstances.

    11.You acknowledge that, in selecting to invest in any product introduced to you by [Integral], you have not relied upon any guidance or advice provided to you by UGC. You understand that, in making a decision to invest in any such product, you should seek independent financial advice.

    12.Any questions, queries or request for clarification relating to any proposed investment introduced to you by [Integral] (or another [Integral referral partner] should not be addressed to UGC. Please direct all such queries to [Integral] or Management of the relevant investment.[95]

    [95] Ibid, 3688-3689.

51. This form essentially contradicts the statements in the earlier document signed by ALB. It discloses the true nature of the relationship that UGC is attempting to manufacture with him. It does it in an impermissible way. A financial adviser cannot ask a client to agree that advice which has not yet been given is ‘General Product Advice only’. It is inappropriate to require a client to agree to such a proposition in advance, particularly in circumstances where it was likely that advice will be given that is personal advice.

52. This document essentially sought from the client a dispensation from the obligation to act in the client’s best interests. It is not possible for an AFSL holder to dispense with statutorily imposed legal requirements by getting a client to agree to the relationship having a particular character in advance of advice being given.

53. ALB also signed an Information and Transfer of Servicing Adviser Authority, which enabled UGC to deal directly with ALB’s existing super fund, Australian Super.[96]

    [96] Ibid, T7.87.

54. When those documents were completed in September 2020, ALB then began dealing directly with employees of UGC.

55. In December 2020 he assisted Mr Videkanic, an employee of UGC, to complete a Client Personal & Financial Details form.[97]

    [97] Ibid, T7.89

56. Relevant questions and answers include:

    What are your reasons for seeking financial advice?....Please use the section below to detail why you have come to see us, and how you would like us to help you…

    I would love for it [my super] to get better returns that what it is having now. I want it to perform better so that when I get older I can rely on it with a lot more confidence because it will provide me with a better life in retirement.

    Please advise area of advice you would like to seek:

    Limited Scope

    Superannuation/ SMSF (e.g. strategies, rollovers, investments)

    Investments (e.g. inside and/or outside superannuation)

    Wealth protection (e.g.Life, TPD, Income Protection, Trauma Insurance)[98]

    [98] Ibid, 3706-3707.

57. Detailed questions then followed about ALB’s personal and financial position. He answered these.

58. Questions were also asked about GCPF and the differences between it and ALB’s current superannuation fund investment strategy. It appears that the differences were described as follows:

    ·Current super fund performance, vs GCPF target return of 13%;

    ·Asset Allocation of current super vs Proposed 100% Property;

    ·Investment Style within Asset Classes (outlining differences between current super fund and proposed investment). Proposed Prop. Development in Residential & Commercial vs typical super fund property in big commercial/industrial.[99]

    [99] Ibid, 3719.

59. He was asked how you feel about those differences. ALB responded:

    I am comfortable, it would be great to see a better return.[100]

    [100] Ibid.

60. He was told ‘GCPF is a new fund and will not be paying any withdrawals for at least a few years until projects start completing. Certainly more than 3 years in future. Are you happy to commit to being invested and not withdrawing in that time?’ ALB responded ‘I am good with that’.[101]

    [101] Ibid.

61. ALB then indicated that he needed UGC to advise on an investment strategy for remaining funds in the SMSF and responded to questions about his objectives.

62. The document was not signed by ALB until 3 March 2021. He appears to have signed it following a call from Mr Videkanic on 25 February 2021, and having been given a Statement of Advice on 1 March 2021.

63. In the phone call on 25 February 2021, Mr Videkanic was seeking more information about ALB’s expenditure. He foreshadowed giving a plan presentation of the advice and highlighted the need for documents to be returned. During the call ALB began asking very basic questions about information he was receiving from the ATO. He was unable to articulate the phrase ‘Self-Managed Superannuation Fund’ and seemed not to know what it was. Mr Videnkanic then gave inaccurate advice stating that he could only get access to GCPF through an SMSF.[102]

    [102] Ibid, T7.69.

1. Not surprisingly, the comparison yielded the conclusion that BD was $242,754 better off if she switched to an SMSF and invested in GCPF.[120]

   [120] Ibid, T7.106, 3978.

2. In the Authority to proceed section BD signed the following statements:

   Acknowledge that UGC has not provided any investment recommendations or any personal advice in relation to investment recommendations or any personal advice in relation to investment recommendations and that any investments considered for my SMSF fall outside of UGC’s agreed Engagement for this Statement of Advice.

   Confirm my understanding that any investment or opportunity presented to me by Integral Wealth does not convey an endorsement of these investments by UGC, regardless of how I was introduced to UGC.[121]

   [121] Ibid, 4001,

3. Miki Petrovic rang her on 20 May 2021.[122] He gave the usual disclaimer that UGC was not engaged to provide best interest advice but was obliged to provide it under legislation that took effect last year.

   [122] Ibid, T7.74.

4. Mr Petrovic went through the Comparison table in the Statement of Advice. While doing so, BD asked ‘so you are advising that I don’t add [employer contributions] into that account [GCPF] I keep AMP going’. Mr Petrovic replied ‘no’. He also stated ‘We are forecasting it [the GCPF option] will reach $690,000’. Mr Petrovic also explained that the SMSF is more expensive than her existing superannuation fund, but ‘in terms of returns and control that you are able to have there is no real comparison.’[123]

   [123] Ibid.

5. BD set up an SMSF and invested in GCPF.

   NH

6. NH came to UGC through Integral.[124] In November 2021, he signed the Authority to Provide Contact Details. [REDACTED]

   [124] Although it is unclear whether Integral were still operating under UGC’s AFSL when he engaged with Integral

7. After undertaking the documentation process with Integral he was referred to UGC. He went through the fact find process with a UGC employee in mid-November 2021 and identified increased wealth and better returns in super as his goals.

8. He was sent the usual letter that stated::

   You have informed us of your two intentions:

   1.     Setup a new SMSF, so that you can direct your own investment decisions and access investments that may not be available through any retail superannuation fund, and

   2.     Invest your superannuation money in the Global Capital Property Fund and Pivotal Diversified Fund.[125]

   [125] Ibid, T7.113, 4083.

9. As previously noted those statements suggest a much more definite state of mind than was in fact the case.

10. The Pivotal a fund referred to was set up by Mr Hewish and marketed by Integral. Pivotal invested across a range of products including:

    (a)Ordinary shares in GCPF;

    (b)Units in UGC Global Alpha Fund;

    (c)Units in UGC Platinum Alpha Fund;

    (d)Units in UGC Private Equity Fund; and

    (e)Third party investments the investment manager of the fund believes will help the fund achieve its stated investment objectives;

    (f)Cash or cash equivalent investments.[126]

    [126] Ibid, 4097.

11. Pivotal is an open-ended unlisted registered managed investment scheme that was open to retail investors, which invested in a number of products related to Mr Hewish, including GCPF. Like GCPF, it targeted a 13% return for investors. It is described as a ‘speculative’ investment in is Products Disclosure Statements.[127] Mr Hewish is a director, and his family trust, owns 25% of the shares in Pivotal’s investment manager, The Australian Funds Management Group Pty Ltd (‘AFMG’).[128]

    [127] Ibid, T7.47, 3258; T7.48, 3321.

    [128] T-Documents, T7.10.

12. Like GCPF Management, AFMG drew fees from Pivotal and the larger the investment in the fund, the more the management company was entitled to draw as a management fee. The investment into Pivotal also attracted a 3.3% fee payable to Integral.[129]

    [129] Ibid, 4095.

13. The usual comparison table was drawn up for NH, against his current fund, LUCRF Super (‘LUCRF’).

14. Estimated long term future returns for LUCRF were selected at 5.65%. The previous financial year LUCRF had returned 18%. It is unclear how the 5.65% number was selected as it was well below the average performance of LUCRF since NH had joined that fund. The returns estimated for the combination of investments proposed for NH were assumed at 13.5%. Despite much higher fees resulting from an SMSF, the comparison concluded that over 10 years NH would be more than $400,000 better off.[130]

    [130] Ibid, 4099.

15. A second comparison was also included in the Statement of Advice. The estimated future return number used came from the 10-year returns for LUCRF, which were reasonable but lower than the actual returns NH had earned since he joined LUCRF. Using the target returns for GCPF and Pivotal, establishing an SMSF and investing in GCPF and Pivotal came out as a better investment, despite the high fees.

16. NH when giving authority to proceed acknowledged the following:

    Acknowledge that UGC has not provided any investment recommendations or any personal advice in relation to investment recommendations and that any investments considered for my SMSF fall outside of UGC’s agreed Engagement for this Statement of Advice.[131]

    [131] Ibid, 4122.

17. NH invested in GCPF and Pivotal after setting up an SMSF.

    JJ

18. JJ’s paperwork followed the pattern described above in relation to the other investors. She made her superannuation switch in May 2022 having been signed up by Wealth Rite earlier that month. She invested in both GCPF and Pivotal.

19. Her benefit analysis was particularly egregious. Having earned 21.76% in a growth-oriented Mercer fund the previous year, her benefit calculation was done on the basis of her existing superannuation generating a 6.4% return. Even with that modest number being used for the benefit calculation, the benefit in 10 years without contributions only reached $176,568.[132] She invested in both GCPF and Pivotal.

    Consideration of personal files

    [132] Ibid, T7.122, 4222.

20. As can be seen, UGC and its authorised corporate representatives ran a system for enticing customers to create SMSFs and invest in products associated with Mr Hewish. This system ran from at least the start of 2020 to late 2022.

21. Most of the documents that clients signed were designed to ensure that no-one was responsible for saying that GCPF or Pivotal were good investments. The documents were designed to create the illusion that the client was independently forming the view that these funds were good investments and was simply approaching UGC to document their intentions. When the files are examined, it is clear that the documents do not reflect the reality.

22. The documents were dishonest. The presentations were dishonest. The advice given was based on faulty foundations and not in the best interests of the client. No financial adviser could have recommended the investment proposal as being in the best interests of the client. The combination of high fees, lack of liquidity, low risk spread and unproven foundation for earning returns meant that the only certainty was that the client’s capital would be eaten away by fees. Whether investment returns would be better or worse than in the existing superannuation funds was not knowable. The lower risk option was always to remain with the existing low fee funds which, in some circumstances, could generate returns in the 18 to 20% range and overall generated returns close to double digits if high growth options were selected. The funds did not require cash reserves to be set aside to pay UGC’s fees and had a proven track record and government guarantees. Any objective consideration of the client’s best interests would not have led to the client being advised to invest in GCPF and Pivotal through an SMSF. The desire to earn fees is the best explanation for Integral, Wealth Rite and UGC steering the clients into those products.

23. Mr Hewish engineered the system. He was personally involved in approving the marketing presentations that clients were subjected to by his corporate authorised representatives. He hoped that with deft client transfers he could maintain the pretence that no-one for whom he was responsible was giving personal advice and recommending the investments. The entire design of the documentation was to escape professional responsibility for putting clients into inappropriate investments that primarily benefited Mr Hewish and his business associates. The system was an exercise in self-interest prevailing over professional responsibility from start to finish.

24. It is surprising that Mr Hewish has come to the Tribunal and defended the system he created. I found him to be a sincere witness who genuinely felt he had done nothing wrong. He was aware of his obligations as a financial adviser but somehow felt that by a combination of careful documentation and patched together processes, UGC and its authorised representatives had somehow managed to generate an $85 million investment for GCPF without ever giving anyone personal advice and without ever having an obligation to consider the best interests of the client beyond ensuring that the investment wasn’t positively contrary to the client’s best interests.

25. I am prepared to proceed on the basis that what Mr Hewish says is what he genuinely thought, but it makes no difference to the outcome. Mr Hewish has had the benefit of a decision by an ASIC delegate and he has had the benefit of experienced legal representation throughout the ASIC process. Despite these opportunities to consider and reflect on how he let his client’s down, he continues to think that whatever he did was not that bad.  It is that lack of insight that makes a banning order of at least 10 years appropriate.

26. From when it was registered to its eventual winding-up, GCPF invested in 15 special purpose vehicles to undertake property-development projects, four of which are related to Mr Hewish. At the point of GCPF’s winding-up, only one project had been completed, many of the projects having suffered from delays related to the COVID-19 pandemic. The results of the remaining projects remain to be seen, and several are forecasted to make capital losses.[133] GCPF never paid a dividend to its investors.

    [133] First Hewish Affidavit at [478]-[479]; First Harris Affidavit, [256], [301]-[302], [311]-[312].

    Banning Order

27. Pursuant to s 920A(1)(d) of the Corporations Act, ASIC may make a banning order against a person if ASIC has reason to believe that the person is not a fit and proper person to:

    (i)Provide one or more financial services; or

    (ii)Perform one or more functions as an officer of an entity that carries on a financial services business; or

    (iii)Control an entity that carries on a financial services business.

28. As I have noted in previous decisions in this area, the concept of a person being ‘fit’ involves three things – honesty, knowledge and ability – honesty to execute the responsibility truly, without malice affection or partiality; knowledge to know what he ought duly to do; and ability so he can execute his responsibilities diligently.[134] The facts support the conclusion that Mr Hewish does not have sufficient knowledge to even know when he and those for whom he is legally responsible are giving personal advice. This renders him unfit to give such advice because he cannot properly understand his legal obligations. Further, he seems unable to appreciate that representatives operating under his AFSL should not be guiding clients of  into products from which he and his representatives will benefit. He lacks a very basic understanding of his duties as a financial adviser. On the facts known there clearly are reasons to believe that Mr Hewish is not a fit and proper person to provide financial services, or perform functions as an officer within a financial services business, or control an entity that carries on a financial services business.

    [134] Hughes & Vale Pty Ltd v New South Wales (No 2) (1955) 93 CLR 127, 156 (Dixon CJ, McTiernan & Webb JJ).

29. For the same reason ASIC has reason to believe that Mr Hewish is not adequately trained or is not competent to provide one or more financial services, perform one or more functions as an officer of an entity that carries on a financial services business, or control an entity that carries on a financial services business.

30. I am also satisfied that Mr Hewish has been involved in the contravention of a financial services law by another person. UGC was obliged to do all things necessary to ensure that the financial services covered by UGCs AFSL were provided efficiently, honestly and fairly,  and to have in place adequate arrangements for the management of conflicts of interest that may arise in relation to activities undertaken by the licensee or a representative of the licensee in the provision of financial services as part of the financial services business of the licensee or the representative (s 912A). [REDACTED] As UGC’s principal, Mr Hewish was responsible for ensuring that UGC and its authorised representatives had proper conflict of interest arrangements in place. Mr Hewish knew about the fees the companies he had an interest in would earn if investments were made in GCPF in accordance with the structure recommended to clients by both UGC representatives and authorised representatives. He made no effective attempt to manage that conflict of interest.  

31. I am satisfied that all of this behaviour amounts to a contravention of a financial services law by UGC. [REDACTED]

32. [REDACTED]

33. In these circumstances, I am satisfied that the necessary thresholds for imposing a banning order on Mr Hewish are satisfied. The question then is what period should the ban cover, and should it exclude Mr Hewish entirely from the financial services industry in all capacities.

    Scope of Banning Order

34. ASIC contends that the banning order should extend for ten years and should exclude Mr Hewish from providing any financial services, controlling an entity that carries on a financial services business or performing any function involved in carrying on of a financial services business.

35. The scope of the banning order is discretionary. In exercising the discretion, it is appropriate for me to have regard to any guidance materials that are applied by ASIC when exercising the discretion. ASIC Regulatory Guide 98 deals with the appropriate length of a banning order.

36. A banning order of 10 years is appropriate if:

    (a)There is any dishonest conduct;

    (b)Conduct that shows serious incompetence or irresponsibility;

    (c)Significant adverse impact on confidence in the integrity of the financial services industry.

37. Mr Hewish’s conduct meets all of those criteria.

38. [REDACTED]

39. Mr Hewish’s conduct in applying the limited advice model to a marketing structure where:

    (a)corporate authorised representatives were operating under his firm’s AFSL; and

    (b)were marketing products when giving personal advice from which he personally stood to gain fees if the investments were made

    shows either incompetence or irresponsibility.

40. [REDACTED]

41. Having regard to the seriousness of the findings and the need to deter others from operating advice models that cause retail investors to establish SMSFs to invest their retirement savings in related party products that are not appropriate for them, a 10-year ban is appropriate.

42. I have given consideration as to whether Mr Hewish should be allowed to continue in the industry in some capacity. He has no qualifications, interest or experience outside of the financial services industry. Consequently, a banning order that prevents him taking employment in the industry will prevent him utilising the skills that he has developed after an extended period working in the industry.

43. I have formed the view that it would not be appropriate to allow the applicant to provide financial services in any capacity during the period of the ban.

44. [REDACTED]

45. Section 760A of the Corps Act expressly states that the main object of Chapter 7 is to promote honesty by those who provide financial services. Consumer confidence in financial products and services is enhanced if the people with whom they deal have a reputation for honesty as well as a private determination to be honest while providing the service. Consumers of financial products and services are often acquiring products and services which they have an imperfect understanding of and in those circumstances are uniquely dependent on the advisers with whom they deal. It is therefore essential to the efficient operation of the markets for those services that consumers are confident in the honesty of the people allowed to provide the service. This makes lapses in honesty in any context a matter which is relevant to promoting the objectives of the Corporations Act. It creates a significant difficulty in allowing a person to continuing to provide financial services in any capacity where they are known to have engaged in dishonest conduct.

46. As Deputy President McCabe emphasised in Williams and Australian Securities and Investments Commission[135] (albeit in the context of a different statutory trigger):

    ...evidence of dishonesty occurring in most contexts is problematic since a commitment (and reputation for commitment) to honest dealing is essential to this role.

    [135] [2018] AATA 2312, [47].

47. In my assessment, where the promotion of honesty on the part of those who participate in the industry is the objective that the Parliament is seeking to attain, dishonesty in most contexts is highly relevant to the question of whether a person should be permitted to participate in the industry in any capacity. In this case there is a close link between the dishonesty in which the applicant engaged and the duties of a financial adviser. The duties of a financial adviser require them to be honest and reliable. These are essential qualities for the performance of the duties. If a person demonstrates that they do not have these qualities, or are prone to very significant lapses when it is to their benefit, they have created doubts about the appropriateness of allowing them to continue to work in the industry at all.

48. The dishonesty in which Mr Hewish engaged is serious enough that it renders it inappropriate for him to participate in the financial services industry in any capacity for the term of the ban.  

    Mr Hewish’s submissions

49. I have considered Mr Hewish’s submissions on this issue including that:

    (a)ASIC seeks small penalties against much bigger failings in large corporates, but is very tough on smaller players in the industry;

    (b)He invested heavily in employing and engaging compliance specialists to ensure UGC was doing the right thing;

    (c)Any non-compliance was inadvertent; and

    (d)[REDACTED]

50. None of these matters persuade me that a lesser penalty should be imposed. It may well be that ASIC should take a greater interest in identifying the individuals who mastermind large scale breaches of the Corporations Act within large corporations, and then ensure that they are excluded from the industry. That however is not an argument for imposing lesser penalties when the person responsible for breaches in a smaller organisation can be clearly identified.

51. Mr Hewish did spend significant sums on compliance and for that he can be commended. It is troubling that despite that expenditure no-one identified the profound problems with the Limited Advice Model despite regular compliance meetings. However expending money on compliance does not diminish Mr Hewish’s responsibility for the system that was deployed.  [REDACTED] He should have been able to avoid basic non-compliance just by having higher personal standards of integrity.

52. For the reasons outlined above I do not accept that non-compliance was inadvertent.

53. [REDACTED]

    DECISION

54. I am satisfied that the decision under review should be affirmed. ASIC’s decision should operate from the date the ban was originally imposed.

    Dates of Hearing  24 to 27 March 2025 and 2 to 5 June 2025

    Applicant’s representative                 Self-represented litigant

    Counsel for the respondent               Ms Stephanie Hooper

    ANNEXURE A: Exhibit A8

    [REDACTED]