Consumer Credit Laws Breached
Financial Circle has been ordered by the Federal Court to pay $ 8, 980, 000 after breaching the consumer and credit laws.
According to the Australian Securities and Investments Commission (ASIC), the Melbourne-based firm offered personal loans up to $5,000 if the consumer agreed to receive and implement financial advice.
The corporate regulator indicated that once this was done the consumer paid high fees from their superannuation. In addition to this, the regulator said that financial circle received an ongoing commission from the insurers.
“This process often resulted in a substantial erosion – in many cases up to 30% – of the client's superannuation balances.”
Financial Circle is accused of unconscionable conduct and breaching licensee obligations under the AFSL.
Misleading the Regulator
The Australian Securities and Investments Commission (ASIC) said that John Lindsay Merity was charged for ‘making false and misleading statements’ to the regulator as pertains to shareholding.
He pleaded guilty on two counts and the corporate regulator indicated that each count carried a maximum penalty of five years in prison.
In 2009 and 2010, Merity claimed that he had no interest in the shares which was later discovered to be untrue.
The charges came after the regulator had made inquiries into shares held by Craigside Limited and Broome Enterprises in North West Resources Limited.