Case note: the importance of getting a client’s name right

In McCormack and Australian Securities and Investments Commission [2016] AATA 1021 the Administrative Appeals Tribunal considered an appeal against an ASIC ban on a financial adviser who thought he was doing the right thing in “fixing” the accounts of a client.

The adviser thought that funds belonging to a client called John Wright had been fraudulently transferred elsewhere.

The ban was lifted when the AAT decided that the adviser’s efforts in trying to fix what he thought was a fraud against his client did not deserve a ban.

The client changed financial advisers when he thought his funds balance was too low.

The adviser resolved to fix it without reporting the matter to the police or ASIC.

In fact he withdrew funds from a super fund account belonging to a completely different person, also named John Wright, by claiming to be that person.

When he found out what he had done, he was embarrassed and he made matters worse by trying to return the money to the super fund without explaining what had happened.

The adviser was found guilty of misleading and deceptive conduct in relation to a financial product or service.

ASIC is appealing the decision to lift the ban.

The lesson? Make sure you carefully identify clients: get their full name, date of birth and residential address and check those details against their investment records. If you suspect a fraud, report it to the police, ASIC or Austrac.

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