Australia’s
financial regulator shut down MWL Financial Services and banned its managing
director for a decade following what officials described as serious failures in
how the firm handled client investments worth $155 million.
ASIC Cancels License of
Firm in $480M Fund Case
The
Australian Securities and Investments Commission (ASIC) cancelled MWL’s license
and imposed a 10-year ban on Nicholas Maikousis, the firm’s managing director,
over conduct related to the Shield Master Fund.
ASIC’s
investigation found MWL operated what it called a “low cost advice
project” from 2021, working with telemarketers to funnel client
superannuation money into Shield. More than 750 clients invested
collectively in the fund between September 2021 and February 2024.
The
regulator discovered MWL provided template advice documents to its
advisers that contained misleading information about Shield’s past performance.
The firm also failed to properly assess the fund before adding it to its
approved investment list.
“Clients
who seek advice from financial advisers should be able to trust that the advice
they receive will be in their best interest,” said Deputy Chairwoman Sarah
Court. “Failing to manage conflicts has the potential to cause consumers
to be given financial product advice that may not suit their needs.”
Hidden Incentives and
Conflicts
ASIC found
MWL had undisclosed bonus arrangements with financial advisers who recommended
Shield to clients. The firm also failed to tell clients about its relationships
with lead generators in some advice documents and financial services guides.
The
regulator determined Maikousis was not just responsible for establishing the
advice project but was “the driving force behind it.” He served on
the investment committee that approved Shield and “did not have an
adequate appreciation for a financial services business’ fundamental
obligations to its clients,” according to ASIC.
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Compliance Manager Also
Banned
Yesterday
(Wednesday), ASIC also banned Robert John Tohill, MWL’s compliance manager
and responsible manager, for five years. Tohill was involved in approving
template advice documents containing false information about Shield’s
performance and failed in his oversight duties.
The
enforcement actions are part of ASIC’s broader investigation into Shield, which
has attracted more than $480 million from at least 5,800 consumers
since February 2022. Most investors accessed the fund through superannuation
platforms managed by Macquarie Investment Management and Equity Trustees
Superannuation.
Wider Investigation
Continues
ASIC
previously banned four other MWL financial advisers connected to Shield advice
and halted new investments in the fund in February 2024. The regulator secured
a court order in June 2024 to freeze Shield’s assets while investigations
continue.
The agency
is examining multiple parties connected to Shield, including Keystone Asset
Management (the fund’s responsible entity, now in liquidation), superannuation
trustees, other financial advisers, and lead generators who referred clients.
In August, ASIC
launched civil proceedings against Equity Trustees, alleging the
superannuation trustee failed in its due diligence responsibilities regarding
Shield.
Client Protection Measures
MWL must
remain a member of the Australian Financial Complaints Authority until August
25, 2026, giving affected clients time to lodge complaints. The firm must also
maintain professional indemnity insurance during this period.
Both MWL
and Maikousis can appeal ASIC’s decisions to the Administrative Review
Tribunal. The bans will appear on ASIC’s public registers.
ASIC
advises anyone who received advice from MWL and has concerns to contact the
Australian Financial Complaints Authority by calling or filing a complaint
online. The service is free for consumers.
This article was written by Damian Chmiel at www.financemagnates.com.
