Australian Securities and Investments Commission, in the matter of Golden Financial Group Pty Ltd (formerly NSG Services Pty Ltd) v Golden Financial Group Pty Ltd

Introduction 1 The defendant, Golden Financial Group Pty Ltd (formerly NSG Services Pty Ltd) (NSG), provides financial services advice and holds an Australian Financial Services Licence permitting it to advise retail clients about and deal in life risk insurance and superannuation products. 2 On 30 March 2017, I made declarations that NSG had contravened ss 961K(2) and 961L of the Corporations Act 2001 (Cth) (the Act). 3 Those declarations were made following agreement being reached between the parties as to the liability of NSG and a hearing at which submissions were made as to whether it was appropriate to make declarations of contravention proposed jointly by the parties. In my reasons for judgment in relation to liability, I explained why I considered it appropriate to make the declarations proposed by the parties: Australian Securities and Investments Commission, in the matter of NSG Services Pty Ltd v NSG Services Pty Ltd [2017] FCA 345 (the Liability Reasons). These reasons should be read together with the Liability Reasons. I adopt the abbreviations used in the Liability Reasons unless otherwise indicated. 4 By its originating application in this proceeding, the Australian Securities and Investments Commission (ASIC) sought the imposition of pecuniary penalties pursuant to s 1317G(1E) of the Act and its costs of the proceeding. At the time of the hearing on liability, no agreement had been reached between the parties in relation to these matters. A timetable was set down for the filing of evidence and submissions in preparation for a contested hearing on these issues. Subsequently, the hearing needed to be adjourned. The hearing was re-listed to take place yesterday. 5 Shortly before the hearing was due to commence, the parties reached an agreed position on proposed pecuniary penalties and costs. The matter was stood down for a short time to enable the parties to finalise the evidentiary material that would be tendered by the parties and the submissions that would be presented in support of the proposed pecuniary penalties. The hearing re-commenced at 2.15 pm yesterday and concluded yesterday afternoon. 6 The parties propose that the Court make orders to the effect that: (a) NSG pay a pecuniary penalty to the Commonwealth in the amount of $1 million in respect of the contraventions of ss 961K(2) and 961L; (b) NSG pay ASIC's costs of the proceeding; and (c) the amount of costs payable pursuant to (b) and pursuant to paragraph 7 of the orders made on 28 June 2017 be fixed in the amount of $50,000. 7 In the course of oral submissions, there was discussion as to whether it would be more appropriate for there to be separate penalty amounts referable to the s 961K(2) contraventions and the s 961L contraventions. The parties in effect submitted that this was a matter for the Court to determine, and that either course was open and appropriate. In the event that the Court considered that it was preferable to order separate amounts for the s 961K(2) contraventions and the s 961L contraventions, senior counsel for ASIC submitted that it would be appropriate for approximately one-quarter of the total proposed penalty to be imposed for the s 961K(2) contraventions and approximately three-quarters for the s 961L contraventions. Senior counsel for NSG indicated that NSG did not oppose that approach. 8 In the course of oral submissions, the parties also indicated that they had reached agreement as to a payment plan whereby the pecuniary penalty would be paid in instalments over a two year period. In light of this arrangement, both parties submitted that I did not need to concern myself with 'capacity to pay' as a factor in considering the appropriateness of the proposed pecuniary penalty. Neither party sought to have the details of this arrangement included in the orders. 9 For the reasons that follow, I consider it appropriate for there to be separate pecuniary penalties ordered in respect of the s 961K(2) contraventions and the s 961L contraventions. As explained above, the parties have in effect proposed that the penalties for these groups of contraventions be $250,000 and $750,000 respectively. I consider these proposed penalties to be within the appropriate range for the contraventions. Accordingly, I will make orders to the effect that NSG pay a pecuniary penalty of $250,000 in respect of the s 961K(2) contraventions and $750,000 in respect of the s 961L contraventions. I will also make the agreed costs orders.

The hearing 10 For the purposes of the hearing in relation to liability, the parties prepared an agreed statement of facts. A copy of this document, with the names of the clients of NSG removed and substituted with letters for the sake of privacy, was set out as an appendix to the Liability Reasons. The parties have agreed that some amendments should be made to that statement. It appears that these amendments are designed to correct some factual matters that came to light in the course of preparing the evidence for the penalty hearing. Accordingly, the parties put forward, and I admitted into evidence, an amended agreed statement of facts dated 20 October 2017 (the ASOF). This document is marked up to show the amendments that have been made. For the sake of completeness, a copy of the ASOF is annexed to these reasons. Again, the names of the clients have been removed and substituted with letters. 11 In addition to the ASOF, the parties jointly tendered a number of documents, as set out in a supplementary agreed statement of facts and tender bundle dated 25 October 2017. 12 The parties each rely on a number of affidavits, some of which have been redacted by agreement to address evidentiary objections. ASIC relies on an affidavit of Vijayendra Nandagiri, a data analyst employed by ASIC, dated 5 May 2017. NSG relies on four affidavits of Chrystal Evans, the Operations Manager of NSG, and two affidavits of Antonios (Tony) Tzouvelis, the Executive Director of NSG. 13 The parties handed up a joint written submission at the hearing and made oral submissions in support of the proposed pecuniary penalty. It is fair to say that each side emphasised different aspects of the facts and circumstances of the contraventions, with ASIC emphasising those factors that were said to be aggravating circumstances, and NSG emphasising those that were said to be mitigating. Nevertheless, both sides contended that the proposed penalty was appropriate.

Applicable principles 14 In Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482 (FWBII), the High Court held that, in the context of civil penalty provisions, it was open to the Court to receive submissions, including joint submissions, as to an appropriate penalty. French CJ, Kiefel, Bell, Nettle and Gordon JJ (with whom Keane J agreed) stated at [46] that there is "an important public policy involved in promoting predictability of outcome in civil penalty proceedings" and that "the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers". Their Honours stated that, as was recognised in Trade Practices Commission v Allied Mills Industries Pty Ltd (No 5) (1981) 60 FLR 38; 37 ALR 256 and determined in NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods), "such predictability of outcome encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation and thus tends to free the courts to deal with other matters and to free investigating officers to turn to other areas of investigation that await their attention". 15 Their Honours stated, at [57], that in civil proceedings there is generally very considerable scope for the parties to agree on the facts and their consequences; and that there "is also very considerable scope for them to agree upon the appropriate remedy and for the court to be persuaded that it is an appropriate remedy". In relation to civil penalty proceedings, their Honours stated at [58]: Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and, for the reasons identified in Allied Mills, highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty. (Footnote omitted.) 16 Their Honours in FWBII also made observations, at [60]-[61], regarding submissions by a regulator in such a context. 17 It follows from the above that the questions to be determined in the present case are: first, whether the Court is sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences; and secondly, whether the penalty that the parties propose is an appropriate remedy in the circumstances thus revealed. 18 In considering these questions, it is necessary to have regard to the principles applicable to the discretion to impose pecuniary penalties. These principles have been discussed in many cases. In the context of the award of penalties for breaches of the corporations law under s 1317G of the Act, I refer to Re HIH Insurance Ltd (in prov liq) and HIH Casualty and General Insurance Ltd (in prov liq); Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80 at [125]-[132] per Santow J. See also Trade Practices Commission v CSR Ltd [1991] ATPR 41-076; [1990] FCA 762; Australian Competition and Consumer Commission v Kokos International Pty Ltd (No 2) [2008] ATPR 42-212; [2008] FCA 5; and Australian Securities and Investments Commission v Superannuation Warehouse Australia Pty Ltd (2015) 109 ACSR 199 at [50]-[51]. More generally, see also NW Frozen Foods; Singtel Optus Pty Ltd v Australian Competition and Consumer Commission (2012) 287 ALR 249 (Singtel Optus); Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 (TPG); FWBII; and Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25. In light of the extensive consideration of the relevant principles in the cases, it is unnecessary to set them out in detail here. 19 In FWBII, French CJ, Kiefel, Bell, Nettle and Gordon JJ explained the purpose of a civil penalty as follows at [55]: … whereas criminal penalties import notions of retribution and rehabilitation, the purpose of a civil penalty, as French J explained in Trade Practices Commission v CSR Ltd, is primarily if not wholly protective in promoting the public interest in compliance: "Punishment for breaches of the criminal law traditionally involves three elements: deterrence, both general and individual, retribution and rehabilitation. Neither retribution nor rehabilitation, within the sense of the Old and New Testament moralities that imbue much of our criminal law, have any part to play in economic regulation of the kind contemplated by Pt IV [of the Trade Practices Act] … The principal, and I think probably the only, object of the penalties imposed by s 76 is to attempt to put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the Act." (Footnotes omitted.) 20 In TPG at [64], French CJ, Crennan, Bell and Keane JJ endorsed the observation of the Full Court in Singtel Optus that the Court, in fixing a penalty, must make it clear to the contravenor and the market that the cost of courting a risk of contravention cannot be regarded as an acceptable cost of doing business.

Application of principles to the present case 21 I note at the outset that the maximum pecuniary penalty for each contravention is $1 million: see s 1317G(1F)(b) of the Act. 22 The facts and circumstances of NSG's contraventions of s 961K(2) and s 961L are set out in the Liability Reasons and the ASOF. It is unnecessary to set out the facts and circumstances in detail again in these reasons. I adopt the description of the facts and circumstances set out in the Liability Reasons. 23 As noted in [32]-[33] of the Liability Reasons, liability under s 961K(2) of the Act is automatically imposed on NSG by reason of its representatives, other than authorised representatives, having contravened ss 961B and 961G of the Act. Because Trinh and Ozak were at all relevant times employees of NSG, and not authorised representatives, NSG is liable for each of their contraventions of ss 961B and 961G. It was established that each of Trinh and Ozak had contravened ss 961B and 961G, hence I made the first four declarations on 30 March 2017. It should be noted that, although there were four separate contraventions, the underlying facts concern the provision of advice on only two occasions. The first two declarations concern the giving of advice by Trinh to Person A (giving rise to two separate contraventions). Likewise, the third and fourth declarations concern the giving of advice by Ozak to Person B (again, giving rise to two separate contraventions). 24 In relation to s 961L of the Act, which imposes an obligation upon a financial services licensee to "take reasonable steps to ensure that representatives of the licensee comply with sections 961B, 961G, 961H and 961J", as recorded in the Liability Reasons at [41], NSG admitted that it failed to take reasonable steps to ensure compliance by its representatives with the obligation imposed by s 961B(1) (which I referred to as the "best interests duty") and the obligation imposed by s 961G (which I referred to as the "appropriate advice duty") by reason of the following practices and policies: (a) the new client advice process; (b) training of NSG Representatives; (c) NSG's systems for monitoring and supervising representatives; (d) external audits; (e) compliance policies; and (f) sales targets and remuneration. 25 I stated in [42] of the Liability Reasons: An examination of each of these practices and policies demonstrates that, at all relevant times, NSG was aware of problems with the form and content of financial product advice provided by its representatives to retail clients. While NSG took some steps to address issues as they arose, NSG failed adequately to address the systemic problems with its practices and policies that enabled representatives to provide advice in contravention of the best interests duty and the appropriate advice duty. NSG obtained detailed advice from a number of external providers, but failed adequately to disseminate and implement that advice across the organisation. 26 At [44]-[74] of the Liability Reasons, I addressed NSG's relevant practices and policies. In light of these matters, I made the declarations set out in paragraphs 5 to 20 of the 30 March 2017 declarations. 27 I regard the contraventions of ss 961K(2) and 961L by NSG as very serious in nature. While the s 961K(2) contraventions arise from specific contraventions by NSG's representatives, for which NSG is automatically liable, the contraventions of s 961L concern the overall way in which NSG itself conducted its operations. The facts and matters referred to above and in the Liability Reasons demonstrate that the contraventions were very serious, and warrant the imposition of a substantial penalty. 28 Given the differences between the provisions in s 961K(2) and s 961L, in that s 961K(2) imposes liability upon NSG for contraventions by its representatives (other than authorised representatives), while s 961L imposes an obligation on NSG itself to take reasonable steps to ensure that its representatives comply with ss 961B, 961G, 961H and 961J, it is appropriate that the penalties for the contraventions of s 961K(2) and s 961L be dealt with separately. 29 It is not necessary, in the present context, to refer to each of the factors that are relevant to the penalty discretion. However, I note, in particular, the following matters. 30 First, it is not suggested that NSG's conduct involved dishonesty. 31 Secondly, the circumstances in which the conduct took place include, relevantly, that at the very start of the transitional period relating to the relevant provisions, the eight year old daughter of Mr Tzouvelis passed away from a sudden childhood illness. This was only two weeks after the Future of Financial Advice reforms had passed into voluntary effect. Mr Tzouvelis entered into a period of intense grieving. The result was that NSG's senior management was substantially impaired during the critical 12 months leading up to the compulsory implementation of the new Div 2 of Part 7.7A of the Act. 32 Thirdly, in relation to the size and financial position of NSG, during the relevant period it operated a substantial enterprise, with commissions received (before expenses) in the millions of dollars. 33 Fourthly, NSG has co-operated with ASIC, including in reaching an agreement in relation to the declarations of contraventions and the ASOF. 34 Further, in relation to the proposed pecuniary penalty, NSG has also reached an agreement with ASIC. I take NSG's agreement to the proposal of a substantial penalty to demonstrate its recognition of the seriousness of its contraventions. Further, I note that Mr Tzouvelis has expressed contrition in his affidavit evidence. 35 Taking the above matters into account, I consider the penalty proposed by the parties, namely $1 million for both the contraventions of ss 961K(2) and 961L, to be appropriate. For the reasons indicated, I consider that separate penalties should be imposed for the s 961K(2) contraventions and the s 961L contraventions. In this regard, I consider the proposed amounts with respect to the two sets of contraventions (namely, $250,000 for the s 961K(2) contraventions and $750,000 for the s 961L contraventions) to be appropriate. In summary, I consider that these penalties, which are substantial, appropriately recognise the seriousness of the offending as well as the other circumstances of this case. 36 Accordingly, I will make orders to this effect. I will also make the costs orders agreed by the parties. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.

Associate: Dated: 31 October 2017 APPENDIX AGREED STATEMENT OF FACTS (Amended - 20 October 2017) (Footnotes omitted) Table of contents Paragraph I Introduction 1 II The Parties 5 III Background to Proceeding 8 IV Factors Relevant to Contravention by NSG of Section 961L of the Act 22 (a) NSG's New Client Advice Process 22 (b) NSG's Training Systems and Practices 29 (c) NSG's Systems for Monitoring and Supervision of NSG Representatives 51 (d) External Reviews and Audits 65 (e) NSG's Compliance Policies 93 (f) Remuneration and Sales Targets 118 V Admitted Contraventions of the Act 123 (a) Contraventions by Bilal El-Helou relating to NSG client Person D 123 (b) Contraventions by Bilal El-Helou relating to NSG client Person C 159 (c) Contraventions by Bilal El-Helou relating to NSG client Person E 183 (d) Contraventions by Adrian Chenh relating to NSG client Person G 227 (e) Contraventions by Adrian Chenh relating to NSG client Person F 261 (f) Contraventions by Bevan Heneric relating to NSG client Person H 285 (g) Contraventions by Van Trinh relating to NSG client Person A 322 (h) Contraventions by Mustafa Ozak relating to NSG client Person B 350

I INTRODUCTION 1. The Plaintiff, the Australian Securities and Investments Commission (ASIC), and the Defendant, Golden Financial Group Pty Ltd (formerly NSG Services Pty Ltd) (NSG) agree to the facts set out below in this Agreed Statement of Facts (ASOF) for the purposes of s 191 of the Evidence Act 1995 (Cth). 2. The facts agreed to and the admissions made in this document are for the purpose of this proceeding only and do not constitute any agreed fact or admission external to this proceeding. 3. NSG has agreed to declarations being made against it in relation to all allegations made by ASIC in this proceeding. 4. This ASOF is made in support of the accompanying minutes of orders for proposed declaratory relief. II THE PARTIES 5. ASIC: (a) is a body corporate pursuant to s 8 of the Australian Securities and Investments Commission Act 2001 (Cth); and (b) may apply to the Court for a declaration of contravention and a pecuniary penalty order under the Corporations Act 2001 (Cth) (Act), pursuant to s 1317J(1) of the Act. 6. NSG: (a) is incorporated pursuant to the Act; (b) carries on business as a provider of financial services; (c) holds Australian Financial Services Licence (AFSL) number 321191 permitting it to, among other activities, advise retail clients about and deal in life risk insurance and superannuation products; (d) from time to time since 1 July 2013 has employed and contracted persons to provide financial product advice, as its authorised representatives within the meaning of the Act and representatives other than authorised representatives, on its behalf (NSG Representatives), including: (i) Bilal El-Helou (El-Helou); (ii) Adrian Chenh (Chenh); (iii) Bevan Heneric (Heneric); (iv) Van Trinh (Trinh); and (v) Mustafa Ozak (Ozak). 7. At all material times: (a) El-Helou, Chenh and Heneric were each an authorised representative of NSG as defined in s 961A of the Act; and (b) Trinh and Ozak were each a representative of NSG other than an authorised representative. III BACKGROUND TO THE PROCEEDING (a) Structure of NSG 8. NSG is a Melbourne-based proprietary limited company that has operated since 1997. 9. At all relevant times, the NSG business has been divided into a number of separate divisions: (a) Reception, human resources and office management (Division 1); (b) Client services for existing clients, client reviews and claims handling (Division 2); (c) Accounts payable and receivable (Division 3); (d) Product lodgement and administration (Division 4); (e) Quality control and compliance of advice (Division 5); (f) New client engagement and advice, verification of advice and pre-production audit (Division 6); and (g) Executive management (Division 7). 10. Division 6 advisers are responsible for servicing new clients. 11. Division 2 advisers service the existing NSG client base, which includes reviewing, increasing and rewriting existing business. A client will become a Division 2 client after their initial financial plan and products are implemented. 12. As at 1 July 2013 until May 2014, NSG had the following management structure: (a) Executive Director; (b) Production Executive Secretary; (c) Production Manager; (d) Quality Control Manager; and (e) Authorised Representative Manager. 13. Between May 2014 and up until at least 20 August 2015 (the end of the relevant period as defined at paragraph 22 below), NSG had the following management structure: (a) Executive Director; (b) Operations Manager; (c) Office Manager/Human Resources; (d) Client Service Manager; (e) Production Manager; (f) Quality Control Officer; (g) Accounts Manager; and (h) Course Room Supervisor. 14. The following persons were designated by NSG as Responsible Persons under its AFSL: (a) from 2 April 2008 to 20 December 2012, Sean Santoro; (b) from 20 December 2012 to 2 February 2015, Ari Papapavlou; and (c) from 20 December 2012 to the current date, Brian Sayers. 15. At all material times, Tony Tzouvelis has been and continues to be the sole director and sole secretary of NSG. 16. The role of Operations Manager, held by Chrystal Evans since at least May 2014, encompasses the role of Compliance Manager. This role oversees the daily operations of Divisions 3, 4, 5 and 6. (b) Client base 17. At all times during the relevant period, NSG had various referral arrangements in place with a number of accounting businesses. 18. NSG's client base is, and at all times during the relevant period has been, predominantly comprised of investors who receive personal financial advice as retail clients. (c) Size of NSG 19. Between 30 June 2013 and 30 June 2016, NSG has had the following numbers of authorised representatives and financial advisers: Financial year ending Authorised representatives Financial advisers 30 June 2013 16 16 30 June 2014 14 14 30 June 2015 6 6 30 June 2016 2 2

20. As at the date of this ASOF, NSG employs or engages two people that are authorised representatives and financial advisers. 21. NSG has filed with ASIC annual AFSL holder profit and loss statements and balance sheets (Form FS70) that set out the net revenue and asset position of the NSG Services Unit Trust and Associated Entity between 30 June 2008 and 30 June 2016 as follows: Financial year ending Revenue from Commissions Net asset position 30 June 2008 $23,704 $10.00 30 June 2009 $1,465,878 $10.00 30 June 2010 $2,039,934 $10.00 30 June 2011 $3,228,078 ($1,642) 30 June 2012 $4,557,752 ($1,640) 30 June 2013 $6,451,121 $1,013.00 30 June 2014 $8,235,937 $3,069,568 30 June 2015 $7,542,301 $3,071,515 30 June 2016 $4,655,103 $3,073,646

IV FACTORS RELEVANT TO CONTRAVENTION BY NSG OF SECTION 961L OF THE ACT (a) NSG's New Client Advice Process 22. In the period between around 1 July 2013 and 20 August 2015 (the relevant period), the usual process and practice at NSG for receiving instructions from and giving advice to new retail clients with respect to life risk insurance and superannuation products (new client advice process) included the matters in the paragraphs that follow. 23. An NSG administrative employee contacted a prospective client by telephone to offer them free financial planning advice and to arrange a meeting with an NSG Representative. 24. During the initial telephone call with the prospective client, an NSG administrative employee and/or an NSG Representative asked the prospective client general information about their personal and financial circumstances in order to "qualify" the prospective client to determine whether it would be worthwhile for them to receive advice in relation to financial products from an NSG Representative. 25. If a prospective client agreed to a meeting during the initial telephone call, then an NSG Representative met with the client in person, usually at the client's home, on one occasion. 26. Prior to the meeting, no one at NSG collected specific information or conducted specific research with respect to the client's financial situation, needs or objectives. 27. At the meeting, the NSG Representative: (a) took and recorded instructions from the client, ordinarily by partially completing a document entitled 'Client Fact Finder'; (b) made, or was provided with, copies of the client's recent superannuation statements and/or insurance documents, if available, as well as, at times, the client's driver's licence or other form of identification; (c) orally gave the client financial advice and recommended one or more life risk insurance and/or superannuation products to the client; (d) did not discuss alternative life risk insurance and/or superannuation products, provide any comparisons between alternative products, or provide any comparison between the client's existing products and any recommended product(s); (e) arranged for the client to sign incomplete forms and documents, including a Client Fact Finder and application forms for the recommended products, and an authority to proceed. 28. Following the meeting: (a) the NSG Representative at times completed, or caused to be completed, documents including application forms for the recommended products, an authority to proceed, and the Client Fact Finder; (b) where two witnesses to a client's signature were required in an application form for the recommended product, the NSG Representative at times arranged for another NSG employee to sign the form as the second witness despite that person not having seen the client; (c) the NSG Representative obtained quotes and/or product information for the recommended products where it had not been done prior to the meeting; (d) the NSG Representative submitted the documents referred to in subparagraphs (a) and (c) above to an internal verifications department, known as the Production Department, for review, processing the product applications and arranging for the implementation of the NSG Representative's advice with respect to the products recommended to the client; (e) up to around 2014, the NSG Representative prepared a written statement of advice (SOA) for the client; (f) from about 2014, the NSG Representative submitted the completed Client Fact Finder, notes and quotes to an internal SOA paraplanner at NSG, who then prepared the SOA; (g) there were no checks at NSG to ensure the client received the SOA prior to the implementation of the recommended products, or at all; and (h) an NSG Representative contacted the client after the advice was provided and instructions implemented (if applicable) to conduct a client satisfaction survey. (b) NSG's Training Systems and Practices Initial training 29. At all material times, NSG provided trainee advisers, upon the commencement of their engagement by NSG, with three months of full-time training to become an NSG Representative (the initial training). 30. Trainee advisers undertaking the initial training included people who had not previously worked in financial services. 31. The initial training was conducted internally by NSG staff. 32. The initial training comprised several courses, including a Communications Course, a Fact Finder Course and a Tone Scale Course. 33. The Communications Course was aimed at teaching trainee advisers how to communicate with clients. 34. As part of the Communications Course trainee advisors were required to work through 'Training Routines', known as 'TRs', which involved a lot of time spent doing role plays with other advisers. 35. The Fact Finder Course focused on the process of obtaining instructions from clients using NSG's Client Fact Finder template document. 36. During the Fact Finder Course, trainee advisers were required to: (a) learn a script for the fact-finding process, which script was contained in the Fact Finder document; and (b) watch a DVD of an adviser role-playing an interview with a client using the Fact Finder document. 37. Part of the Fact Finder Course was focused on communicating with clients effectively, including by: (a) learning to handle client "objections" to giving particular information or talking about particular topics; and (b) practising using the script for the fact-finding process in the Fact Finder document through role-plays, which were often video-taped and then shown to trainee advisers. 38. During the Fact Finder Course, trainee advisers were not trained by NSG how to use the information they had gathered in order to provide appropriate financial advice within the meaning of the Act, or at all. 39. The Tone Scale Course focused on learning to identify and match clients' "emotional tones". 40. As part of the initial training, trainee advisers were required to read a number of books and materials about selling products. 41. The initial training did not include any training on: (a) the financial products in respect of which NSG provided financial advice; or (b) (prior to 13 February 2014) preparing and providing clients with a SOA; or (c) (prior to 13 February 2014) the substance of any legal obligations imposed on NSG Representatives with respect to the provision of advice to clients, including obligations imposed by the Future of Financial Services (FOFA) provisions of the Act. 41A. From 13 February 2014 onwards, a video recording of the training session referred to in paragraph 46(b) below dealt with, among other things, the process of preparing and providing clients with an SOA, and the substance of the FOFA obligations. Internal training of NSG Representatives 42. At all material times, NSG held weekly training sessions for NSG Representatives (the weekly training). 43. The weekly training usually involved advisers reading books, memorising scripts from the Client Fact Finder document and doing role plays with other advisers. 44. The weekly training did not include any training on: (a) the financial products offered by NSG; or (b) preparing and providing clients with a SOA; or (c) the substance of any legal obligations imposed on NSG Representatives with respect to the provision of advice to clients, including obligations imposed by the FOFA provisions of the Act. 45. At all material times, NSG trained and instructed NSG Representatives that it is almost always in the client's best interests to take out some form of life risk insurance. External training of NSG Representatives 46. NSG conducted three external sessions directly on the implementation of the FOFA provisions of the Act, being: (a) a training session provided by a company called Jigsaw Support Services Limited on 16 March 2012; (b) a training session provided by Mills Oakley Lawyers on 13 February 2014; and (c) a training session provided by a company called Assured Support Pty Ltd on 20 May 2015, but did not provide any other external training to trainee advisers or NSG Representatives directly on their FOFA obligations (other than, from 13 February 2014 onwards, to require trainee advisers to review a video of the training session referred to in (b) above). Monitoring of training by NSG 47. At all material times, NSG did not routinely monitor whether individual NSG Representatives had attended specific internal or external training sessions offered by NSG. 48. Further, at all material times, NSG did not follow ASIC Regulatory Guide 146 and identify deficiencies in the knowledge or skills of individual NSG Representatives in relation to the regulatory requirements to which they were subject, including their FOFA obligations. 49. At all material times, NSG did not follow ASIC Regulatory Guide 146 and establish annual training plans for each NSG Representative which addressed the following steps: (a) assessed the NSG Representative's training needs in relation to training standards; (b) identified the NSG Representative's gaps or weaknesses in the preceding year and the areas where training will be focused; (c) set objectives to be met; (d) determined the structure of the continuing training program; (e) assessed whether the NSG Representative had met the objectives of the training program; and (f) provided feedback sessions with the NSG Representative about their performance. 50. Further, during the relevant period, NSG did not follow ASIC Regulatory Guide 146 and: (a) keep complete records of each NSG Representative's training plan; or (b) keep evidence of all NSG Representatives' continuing training, such as receipts, enrolment records, attendance lists and daily diary notes. (c) NSG's systems for monitoring and supervision of NSG Representatives 51. During the relevant period, NSG did not conduct regular or substantive performance reviews of NSG Representatives. 52. During the relevant period, NSG did not conduct regular internal audits or compliance checks on financial advice provided by NSG Representatives. Monitoring and supervision policy 53. From around 14 February 2014, NSG had a policy entitled 'Monitoring and Supervision Policy & Procedures' (Supervision Policy), which stated that: (a) the purpose of the policy was to outline NSG's "monitoring and supervision framework to monitor the activities of its representatives and ensure compliance with the financial services laws"; (b) NSG is "committed to reviewing its Representatives performance on a quarterly basis"; and (c) each representative's compliance with NSG's obligations under its AFSL would be a criterion against which representatives were assessed. 54. NSG did not review NSG Representatives' performance on a quarterly basis or any other regular basis. 55. The Supervision Policy was not in place at the time of the effective date of Division 2 of Part 7.7A of the Act on 1 July 2013; it was put in place on or about 14 February 2014. Internal investigation of advisers 56. In September 2013, NSG conducted an internal audit of El-Helou and five of his client files (the El-Helou audit). 57. The El-Helou audit found that: (a) all client fact finders were relatively similar in regards to content, with all recording the same or similar responses from clients for risk analysis and the insurance questions; (b) all fact finders were missing budget information and full information on assets and liabilities; (c) insufficient data had been collected on the clients' relevant personal circumstances to support the recommendation of insurance through superannuation; (d) no information was included about clients' existing products; (e) there were no records of conversations found for any client; (f) in all instances, El Helou had recommended insurance through superannuation but it was unclear whether the advice to the clients was "completely appropriate", as insufficient information about the client's personal financial commitment made it impossible to determine whether insurance outside of superannuation may have been appropriate; (g) El-Helou was not on a training schedule and no CPD points had been recorded for two years; and (h) El-Helou had recently been the subject of two ethics reports in relation to complaints from clients regarding nondisclosure of medical conditions in applications for income protection insurance, being: (i) a complaint from Wendy White for whom El-Helou had arranged to purchase income protection insurance in 2011 and subsequently, in 2013, had her claim denied on the basis of non-disclosure of a pre-existing condition; and (ii) a complaint from Shannon Berriman who stated he was told by El-Helou not to disclose his diabetes as a pre-existing condition on his application form for income protection insurance, (Ethics Reports). 58. In respect of the incident referred to at paragraph 57(h)(ii) above, NSG received an internal report from the NSG Production Manager, Robert Fowler, dated 9 May 2013 about the incident which stated "I do verify pretty much all of the insurances each week and I am quite alarmed by the high rate of standard client's [sic] Bill has. This incident has raised questions to me and I am now starting to doubt the validity of his other sales." 59. Following the El-Helou audit NSG: (a) required El-Helou to re-read sections of ASIC's Regulatory Guide 146; (b) required El-Helou to re-do sections of the internal NSG fact-finder course; and (c) did not require El-Helou to undergo any further external training. 60. Further, following the El-Helou audit NSG: (a) did not investigate how the client files that were the subject of the El-Helou audit had passed through the Verifications and Quality Control processes of NSG; and (a) did not conduct an internal audit of any other NSG Representative to ascertain if similar conduct had been or was being engaged in by other NSG Representatives. Other matters 61. In around January 2015, NSG introduced a new client survey which required NSG staff to telephone clients and, among other matters, check that the completed Client Fact Finder accurately reflected the client's personal financial circumstances as disclosed to the NSG Representative who acted as their adviser (NSG quality control survey). 62. El-Helou and Chenh informed Chrystal Evans that they did not wish their clients to participate in the NSG quality control survey. 63. For a period of time, NSG permitted El-Helou and Chenh to conduct the NSG quality control surveys of their own clients on the conditions that the calls be recorded, the surveys be reviewed by NSG staff and all surveys be conducted within 48 hours of the client's application being lodged. 64. After a short trial period El-Helou and Chenh agreed to NSG staff conducting the NSG quality control survey of their clients. (d) External Reviews and Audits First Jigsaw Review - February 2012 65. In February 2012, Jigsaw Support Services undertook an external review of five advisers, Brian Sayers, Damian Espinosa, Thomas Maloney, Bilal El-Helou and Sean Santoro, by reviewing three of each adviser's client files (the Jigsaw Review). 66. The Jigsaw Review identified the following issues with the client files of each adviser reviewed: (a) client questionnaires were incomplete; (b) the files did not contain evidence of an investigation into a range of strategies and products; (c) the files did not contain evidence that a comparison of existing products or insurance had been completed; (d) there was no evidence that an insurance needs analysis, and/or an analysis of the level or type of cover recommended, had been completed for the client; (e) where limited advice was provided, there were inadequate file notes confirming the client's understanding about the limited nature of the advice to be provided; and (f) there were no or inadequate file notes from discussions and meetings with the client that would support the advice. 67. The Jigsaw Review identified the following issues with the SOAs prepared by each adviser reviewed: (a) the SOAs did not detail the clients' goals and objectives; (b) the SOAs did not contain a discussion of a range of strategies and products; (c) the SOAs did not contain a comparison of existing products and the recommended replacement product; (d) the reasons for the strategy and product recommendations were not clear, and SOAs did not show how the recommended strategy would assist the client to meet his or her goals and objectives; (e) the level of insurance coverage taken out by the adviser on behalf of the client was significantly different to the level recommended by the adviser, without explanation; (f) the information in the client questionnaire and the SOA was inconsistent and there was no explanation for the inconsistency; and (g) the fee disclosure was incomplete. 68. Further, in respect of individual advisers, the Jigsaw Review identified the following issues: (a) for El-Helou, Jigsaw identified concerns with the dates of the various documents, with the authorities to proceed signed on the same day as the fact finders, and the SOAs dated two weeks later, and noted that "these issues were discussed with Chrystal [Evans] as she will need to initiate the internal reporting process to determine if any breaches have been identified"; (b) for Santoro, Jigsaw identified that the client questionnaire, SOA and authority to proceed were all signed on the same day; and (c) for Sayers and Espinosa, Jigsaw concluded that if there was a complaint of inappropriate advice for any of their files, and for Santoro for one of his files, the adviser would have difficulty defending the case. 69. Further, each adviser whose files were the subject of the Jigsaw Review was provided with a questionnaire designed to test the knowledge of the adviser in the areas of legislative knowledge, knowledge of advice procedures, and technical knowledge, but no adviser completed the questionnaire. 70. At the time of the Jigsaw Review, and during the relevant time, NSG knew each of the matters set out in paragraphs 66 to 69 above. Second Jigsaw Review - May 2012 71. In May 2012, Jigsaw conducted a compliance review of NSG's AFSL (the Second Jigsaw Review). 72. The Second Jigsaw Review recommended, relevantly, that NSG ensure all breaches by representatives of financial services law are reported and addressed, including the breaches identified in the Jigsaw Review, and to assess whether any of those breaches were serious and/or systemic, and if they should be reported to ASIC. 73. NSG did not record any of the breaches identified in the Jigsaw Review in the Breaches Register, nor did it report any of the breaches identified in the Jigsaw Review to ASIC. Ashurst Review - June and December 2013 74. In the second half of 2013, Ashurst provided NSG with advice about the following matters: (a) client files; (b) the best interests obligations in s 961B of the Act; and (c) NSG's compliance framework. Client File Review 75. In June 2013, Ashurst commenced a review of five advisers, Daniel Lamanna, Bilal El-Helou, Brian Sayers, Tom Maloney and Sean Santoro, by reviewing one client file for each adviser (the Ashurst Client File Review). 76. The Ashurst Client File Review did not result in a final report. Ashurst identified the following negative issues with the SOAs prepared by Lamanna, El-Helou, Sayers and Maloney: (a) the advice in each of the SOAs was given in a single sentence and was identical across all four client files of the four different advisers; (b) the advice did not explain how the products and strategies recommended were relevant to the clients' needs; (c) the SOAs did not explain what the consequences of switching superannuation funds might be; (d) the SOAs did not set out any likely costs or negative consequences of following the advice in a way that was personalised to the clients; and (e) the SOAs included a table comparing existing and recommended superannuation products, but did not explain the differences between the two funds. 77. Further, with respect to the Sayers client file, the Ashurst Client File Review found that: (a) the client's mortgage debt was incorrectly recorded as $12,000 rather than $120,000, which affected the calculation of the client's personal circumstances and may have rendered the resulting advice misleading and/or inappropriate for the client; (b) other than a comparison of the cost of insurance premiums, there was little to show that Sayers had considered other insurance or superannuation options that may be available; and (c) there was nothing in the SOA or the file to indicate that the effect of a signed variation to recommendations had been adequately explained to or was understood by the client. 78. NSG initially agreed to provide Ashurst with ten client files to review, but ultimately only provided five client files to review, which were the subject of a draft review report. Ashurst did not provide NSG with a finalised client file review report. 79. At the time of the Ashurst Client File Review, and during the relevant time, NSG knew: (a) each of the matters set out in paragraphs 66 to 69 above; and (b) the matters set out in paragraphs 75 to 78 above. Best Interests Advice 80. On 16 July 2013, Ashurst provided NSG with written draft advice concerning NSG's obligations under the FOFA regime, and a draft 'Pro Forma Adviser Best Interests Checklist'. The draft advice recommended that NSG, as an interim measure pending comprehensive advice from Ashurst: (a) immediately inform advisers of their obligations under the best interests duty; (b) require that advisers complete a Best Interests Checklist for all clients advised from 1 July 2013 onwards; (c) require that advisers retain a copy of the completed Best Interests Checklist on each client file; and (d) require that advisers inform NSG immediately of any issues identified in relation to a client file as a result of their answers to the questions in the Best Interests Checklist. 81. On 22 August 2013, Ashurst provided NSG with a document entitled 'Best Interests Declaration' under cover of an email in which Ashurst stated that the document, together with Ashurst's proposed template SOA and Client Fact Finder, would assist NSG "to demonstrate that it has complied with its obligations under FOFA, by taking reasonable steps to ensure that its representatives comply with the best interests duty". 82. On 21 January 2014, Ashurst provided NSG with a document entitled 'Best Interests Declaration', in which Ashurst stated "would be a useful prompt" for advisers to complete "before a Statement of Advice is issued". 83. NSG did not: (a) follow or implement the interim advice provided on 6 July 2013, at the time of receiving the advice or at all, but NSG did train advisers about their best interests obligations in the training sessions referred to in paragraph 46 above; (b) incorporate the Best Interests Declaration, or any form of it, into its SOA template; (c) incorporate the Best Interests Declaration into its Client Fact Finder template; or (d) require any of its authorised representatives to use the Best Interests Declaration. Compliance Framework 84. On 8 November 2013, Ashurst provided NSG with written advice regarding its compliance framework and recommended, inter alia, that NSG: (a) ensure that the records of education and training received by NSG representatives are kept up to date, in order to help NSG to demonstrate that it is satisfying its obligations as an AFSL holder; (b) consider regular reviews of recorded client complaints to identify systemic problems and develop strategies to address such problems as they are identified; (c) consider the effectiveness of its breach reporting policy and whether additional training is required to ensure NSG employees report all breaches and all possible breaches in accordance with policy; and (d) consider recruiting more experienced representatives and compliance personnel to enable NSG to improve compliance with its legal obligations, provide appropriate monitoring and supervision, and to meet current and anticipated operational requirements. 85. NSG did not implement the recommendations referred to above. ASIC Review - 2013 86. Between May and December 2013, ASIC conducted a review of 11 NSG client files, and found that 10 contained inappropriate advice. 87. On 28 January 2014, NSG informed ASIC that: (a) it intended to lodge a significant breach notification with ASIC in respect of a defective SOA template; (b) it intended to lodge a breach notification with ASIC in respect of defective SOAs provided to four clients; (c) it would appoint two full-time compliance personnel, including a Senior Compliance Manager, to take responsibility for implementing improvements to its compliance framework, including: (i) conducting quarterly audits of at least one randomly selected client advice file for each adviser; (ii) arranging for an external provider to conduct an annual review of at least one randomly selected client advice file for each adviser; and (d) it would implement changes to the NSG SOA template, including a requirement for advisers to make a series of declarations related to consideration by the adviser of the best interests duty prior to issuing an SOA to a client. 88. NSG has not taken the steps in paragraph 87 above. Assured Support - May 2015 89. In 2015, NSG engaged Assured Support to review five client files handled by NSG Representatives Bilal El-Helou, Adrian Chenh, Bevan Heneric, Benjamin Herzog and Mark Pearson, which were selected by NSG (the Assured Review). 90. The Assured Review identified the following issues across the five client files: (a) the SOAs failed to adequately reflect the information collected and retained in the client file and client records, and failed to address the clients' stated objectives; (b) there was insufficient consideration of whether the existing superannuation fund or insurance provider could deliver an equivalent benefit to that recommended by the adviser; (c) in several cases, the SOA, the Client Fact Finder, and the product application forms all had the same date. The Client Fact Finder and the product application forms were signed by the client; (d) the insurance recommended by the adviser was considerably more expensive than the client's existing insurance, but there was no or inadequate explanation for why this was appropriate for the client; and (e) in at least one case, the cost of the recommended insurance monthly premiums was half the client's monthly superannuation contributions, whereas the client's main stated financial objective was to retire within 3-10 years. 91. The Assured Review recommended that NSG provide its advisers with "immediate refresher training" on the following subject areas: (a) appropriate product replacement advice; (b) the best interests duty; and (c) the client priority rule. 92. The Assured Review also recommended that NSG ensure advisers undertake regular compliance training and increased monitoring and supervision to address the failures identified by Assured. (e) NSG's Compliance Policies 93. During the relevant period, NSG did not have any policy which addressed the NSG Representatives' statutory duties and requirements under Division 2 of Part 7.7A of the Act. Policies regarding the provision of advice 94. During the relevant period, NSG had a policy entitled 'Conflicts of Interest' dated 14 June 2011 (Conflicts Policy). 95. The Conflicts Policy: (a) did not address potential conflicts that could arise where an adviser was remunerated partly or wholly by commission; (b) did not contain any information or guidance as to the consequences for advisers of breaching the policy; and (c) was not updated following the introduction of Division 2 of Part 7.7A of the Act. 96. During the relevant period, NSG had a policy entitled 'Issuing a Statement of Advice' dated 3 April 2014 and revised on 13 January 2015 (SOA Policy), which required NSG Representatives to ensure that SOAs were signed off by the client prior to the adviser commencing to apply for products recommended by the client to the adviser. 97. During the relevant period, NSG Representatives did not follow the SOA Policy for each of the clients set out in Part V of this SOAF. 98. At or shortly after the date of each SOA prepared for each of the clients in Part V, NSG knew the matters in paragraph 97 above. 99. During the relevant period, NSG had policies entitled 'How to Handle and Communicate Revised Terms' dated 28 January 2014 (Revised Terms Policy), and 'Handling Revised Terms: When Replacing Existing Insurance Cover', dated 29 January 2014 (Revised Terms and Insurance Policy) which required NSG Representatives to advise the client if an insurance company offered revised terms. 100. During the relevant period, there were instances where NSG Representatives did not follow the Revised Terms Policy and the Revised Terms and Insurance Policy, as shown by the matters set out in paragraphs 112(a) and (c), being complaints recorded in the Complaints Register. 101. At or shortly after the date of each incident, NSG knew the matters in paragraph 100 above. 102. During the relevant period, NSG had a policy entitled 'Compliance Arrangements' dated 16 May 2011 (Compliance Policy), which stated that: (a) NSG would survey clients immediately after their appointment with an NSG Representative; (b) NSG would check all SOAs and the recommendations within them to ensure they were appropriate prior to the SOA being completed; and (c) NSG would survey clients once the recommended advice had been implemented. 103. The Compliance Policy was not followed or enforced in that, for the clients listed in Part V of this ASOF: (a) NSG did not survey the clients immediately after their appointment with an NSG Representative; and (b) NSG did not check the SOAs and recommendations within them to ensure they were appropriate prior to the SOA being completed. 104. The Compliance Policy was not updated following the introduction of Division 2 of Part 7.7A of the Act until 11 November 2015. 105. During the relevant period, NSG had a policy entitled 'Responsible Managers' dated 10 November 2011, which: (a) defined Responsible Manager as "those persons on whom NSG will depend in order to meet the organisational competency requirements under law and the various license obligations", and who would hold "positions that make the significant day-to-day business decisions about the ongoing provision of financial services", and "of good fame and character"; (b) stated that the Compliance Manager would review annual individual performance reviews of Responsible Managers to ensure performance was consistent with agreed standards; and (c) stated that the Compliance Manager would "review compliance incidence reports and registers to identify recurring or systemic development or competency deficiencies in respect to Responsible Managers". 106. The Responsible Managers policy was not followed or enforced in that: (a) the persons identified in paragraph 14 above did not at any time make significant day-to-day decisions about the ongoing provision of financial services at NSG; (b) NSG did not conduct annual performance reviews for Responsible Managers; (c) during the relevant time, Brian Sayers and Ari Papapavlou were subject to complaints by clients with respect to the provision of financial advice, and/or found to be noncompliant with financial services law by internal NSG reviews, the Jigsaw Review, the Ashurst Client File Review, described at paragraphs 67 and 68, and 76 and 77 above; and (d) Sayers, Chenh, and Papapavlou continued as Responsible Managers from NSG's AFSL following the findings and complaints referred to in paragraph 91 above. 107. The Responsible Managers policy was not updated following the introduction of Division 2 of Part 7.7A of the Act. Policies regarding client complaints and licensee breaches 108. During the relevant period, NSG held the following policies: (a) Licensee Breaches Policy dated 10 November 2011 (Breaches Policy); (b) Dispute Resolution Policy dated 22 May 2011 (Complaints Policy). 109. The Breaches Policy stated that NSG Representatives who were aware of or noticed a breach should report it to the Compliance Manager or Production Executive Secretary, who in turn must enter all breaches in the breach register. 110. The Complaints Policy stated that where complaints could not be resolved within 48 hours, the complaint should be lodged with the Compliance Officer, who would then log the complaint in the Complaints Register. 111. The Breaches Policy and the Complaints Policy: (a) were not updated following the introduction of the FOFA provisions of the Act until 27 July 2014; (b) did not contain any information or guidance about how the policy was to be enforced; and (c) did not contain any information or guidance about the consequences for NSG Representatives of breaching the policy. 112. NSG's internal register of complaints by clients made before and during the relevant time (Complaints Register), recorded 18 complaints from clients made between 17 January 2013 and 14 April 2015, including the following: (a) the NSG Representative advised a client that his income protection insurance application had been accepted and was active, but failed to advise the client that the application had in fact been rejected by the insurance company, leaving the client without income protection insurance; (b) a client's superannuation was rolled over to another company without the client's permission, and after the client had written to the NSG Representative instructing the adviser not to roll over her superannuation; (c) a client's insurance was changed, and then cancelled, without the client's permission or knowledge; (d) a written SOA was provided after the date of the meeting with the client at which advice was given, and after the advice had been implemented, but back-dated to the date of the meeting; (e) NSG Representatives did not properly disclose fees, or did not disclose fees at all; (f) the NSG Representative recommended a superannuation fund for which the client was not eligible; (g) clients were advised to take out insurance within their superannuation funds that cost more than, or a substantial proportion of, the client's superannuation contributions; (h) the NSG Representative did not disclose a client's pre-existing medical condition in an insurance application form; and (i) the NSG Representative promised to cancel an insurance policy, but failed to do so. 113. For each of the complaints in the Complaints Register: (a) NSG concluded and recorded that neither the NSG Representative nor NSG had committed any breach of law that was required to be reported to ASIC; and (b) NSG did not record any sanctions or consequences for NSG Representatives, other than one NSG Representative paying from his own funds for refunded fees and lost investment income, as set out below at paragraph 239. 114. Further, the Complaints Register: (a) did not record either of the complaints identified in the El-Helou audit described at paragraph 57(h) above; (b) did not record a complaint made by NSG client Person H on 14 April 2015 in respect of advice by NSG Representative Bevan Heneric described at paragraphs 285 to 316 below, and accordingly, was not compliant with NSG's own Complaints Policy. 115. NSG's internal register of breaches for the relevant period, entitled 'Breaches Register' (Breaches Register), recorded four breaches by NSG Representatives made in July, September and December 2013, and March 2015, of financial services law in relation to financial advice provided to clients: (a) a SOA contained incorrect fee information for a recommended superannuation product; (b) there was an inconsistency between the Client Fact Finder and the SOA regarding the client's risk profile; (c) a SOA did not include any text explaining the adviser's recommendations; and (d) a Client Fact Finder failed to record that the client had two dependent children, which was disclosed to the adviser. Product application forms, including one for a loan, were submitted containing wrong information. On investigation, NSG determined that "this is a breach of our license regulations" and "this is considered by ASIC financial gain and 'whiting out' details to present a different picture than what is actually true is considered fraud". 116. NSG did not report to ASIC any of the breaches or potential breaches by NSG Representatives listed in the Breaches Register as set out above. 117. Further, the Breaches Register: (a) did not record any of the breaches or potential breaches identified in the El-Helou audit described at paragraph 57 above; (b) [sub-paragraph deleted]; (c) did not record any of the breaches or potential breaches identified in the Ashurst Client File Review described at paragraphs 76 to 77 above; (d) did not record any of the breaches or potential breaches identified in the Assured Review described at paragraph 90 above; (e) did not record any of the breaches identified by NSG to ASIC in the letter dated 28 January 2014 described at paragraph 87(a) and (b) above; (f) did not record the breach or potential breach identified in the complaint by Person G in October 2014 regarding advice provided by Chenh, as set out at paragraph 255 below; (g) accordingly, was not compliant with NSG's Breaches Policy; and (h) does not record any sanctions or consequences for NSG Representatives, other than two instances of the NSG Representative correcting the incomplete or inaccurate SOAs. (f) Remuneration and Sales Targets 118. In the period prior to around 1 July 2013, NSG had a "commission only" remuneration model for NSG Representatives, whereby such representatives would only be compensated by way of commissions for sales of life risk insurance products and superannuation rollovers. 119. In the period after around 1 July 2013: (a) NSG adopted a remuneration model whereby NSG Representatives were to receive a base salary as well as a bonus if monthly sales exceeded monthly sales targets; but (b) in practice, continued to employ a "commission only" remuneration model with respect to some NSG Representatives. 120. During the relevant period, NSG Representatives were required to meet weekly sales targets. 121. When NSG Representatives did not meet their weekly sales targets: (a) they would at times be given a "pink sheet", containing a warning by NSG supervisors; and (b) they would at times be required by NSG to repeat parts of the initial training. 122. During the relevant period, NSG conducted a weekly sales meeting where: (a) NSG distributed a document to all NSG Representatives who were present at the meeting, which set out each NSG Representative's sales from the previous week in monetary terms; (b) there was a discussion about how much insurance and how much superannuation each NSG Representative sold in the previous week; and (c) each NSG Representative present at the meeting was required to tell a "success story" from the previous week about a sale they had made to a client. V CONTRAVENTIONS OF THE ACT (a) Contraventions relating to advice by El-Helou to NSG client Person D Relevant conduct by El-Helou with respect to Person D The Person D meeting 123. On 20 August 2013, El-Helou, as an NSG Representative, attended the home of Person D for a meeting to provide Person D with personal financial advice as a retail client (the Person D meeting). 124. At the Person D meeting, Person D told El-Helou that: (a) he had an annual income of $95,000 inclusive of superannuation; (b) he owned a home valued at about $650,000 subject to a mortgage with BankWest of approximately $430,000; (c) he had approximately $60,000 in a UniSuper superannuation fund; and (d) he had superannuation in another fund from his time working in the Catholic education system, but did not know the name of the fund or the amount in the fund. 125. At the time of the Person D meeting, Person D, unbeknownst to him, already had life and income protection insurance through his existing UniSuper superannuation fund. 126. At the Person D meeting, Person D provided El-Helou with copies of two recent yearly group certificates and a copy of his most recent UniSuper Benefit Statement as at 30 June 2013 (the Person D UniSuper Statement), which referred to Person D having life and income protection insurance through his existing UniSuper superannuation fund. 127. At the Person D meeting, Person D told El-Helou that his financial objective was, relevantly, to consolidate his superannuation funds into one fund. 128. At the Person D meeting, El-Helou orally advised Person D to: (a) roll over all of his existing superannuation to a fund operated by Macquarie (Person D superannuation advice); and (b) take out life and disability insurance and income protection insurance with Macquarie (Person D insurance advice). 129. In respect of the Person D superannuation advice, El-Helou: (a) orally advised Person D that Macquarie was a better superannuation account, with much better returns than UniSuper, and that it had a spreading portfolio and was the low risk high return portfolio that NSG uses; (b) did not provide Person D with any information or documents comparing his existing superannuation funds with the recommended Macquarie fund; (c) did not suggest any alternative superannuation funds other than the Macquarie fund; and (d) did not provide any information about the fees and costs of the recommended Macquarie fund. 130. In respect of the Person D insurance advice, El-Helou: (a) did not advise Person D that he already held life and income protection insurance through his existing UniSuper superannuation fund, or discuss whether there was an option to take out insurance with Person D's Catholic Super superannuation fund, which El-Helou subsequently identified as the superannuation fund Person D had from his time working in the Catholic education system; (b) orally advised Person D that any insurance premiums would be paid from the Macquarie fund and the cost of insurance would be offset by interest earned on his superannuation; (c) did not discuss with Person D, or provide any oral advice to Person D, about the appropriate level of insurance cover; (d) did not suggest any alternative insurance providers other than Macquarie; (e) did not otherwise explain his reason for advising Person D to take out insurance with Macquarie; and (f) did not provide any information about the fees and costs of the recommended Macquarie insurance. 131. At the Person D meeting, El-Helou did not provide Person D with any information about the commission and fees payable to El-Helou or NSG in relation to his advice and recommendations. 132. After hearing El-Helou's advice and recommendations, during the Person D meeting, Person D: (a) agreed to follow El-Helou's recommendations to roll over his superannuation to Macquarie and to take out insurance through the Macquarie fund; and (b) at El-Helou's request, signed a number of forms and documents, which were then retained by El-Helou, being: (i) an authority to proceed bearing the date 27 November 1968, being Person D's birthdate; (ii) an incomplete document entitled Client Fact Finder bearing the date 20 August 2013 (Person D Fact Finder); (iii) an incomplete document entitled 'Personal Statement - Insurance through Superannuation' bearing the date 27 August 2013; (iv) an incomplete UniSuper Portability and Rollover form bearing the date 20 August 2013; (v) an incomplete Macquarie Super Accumulator Application Form bearing the date 20 August 2013; and (vi) an incomplete Macquarie Life New Business Application bearing the date 20 August 2013. After the Person D meeting 133. Following the Person D meeting, El-Helou: (a) completed or caused to be completed each of the forms listed in paragraph 132(b)(ii) to (vi); (b) arranged for another NSG employee, Tom Maloney, to sign the Macquarie Super Accumulator Application Form bearing the date 20 August 2013, purportedly as a witness of Person D's signature; (c) completed or caused to be completed an NSG form entitled 'Authority to Disclose and/or Receive Information' bearing the date 3 December 2013; and (d) completed or caused to be completed an Australian Government form entitled 'Request to transfer whole balance of superannuation benefits between funds' bearing the date 3 December 2013. 134. Following the Person D meeting, on about 23 August 2013, El-Helou obtained or caused to be obtained a quote from Macquarie with respect to life and disability and income protection insurance. 135. Following the Person D meeting, El-Helou prepared or caused to be prepared at NSG a document entitled 'Statement of Advice' for Person D bearing the date 20 August 2013 (Person D SOA), which was the same date as the Person D meeting and the incomplete forms signed by Person D and set out at paragraph 132(b)(ii) to (vi) above. 136. Following the Person D meeting, El-Helou submitted or caused to be submitted on behalf of Person D the product application forms referred to at paragraphs 132(b)(iv) to (vi) above in order to implement the Person D superannuation advice and the Person D insurance advice. However, notwithstanding the Person D superannuation advice, El-Helou requested or caused to be requested the rollover of most but not all of Person D's UniSuper superannuation funds to Macquarie and sought to leave $5,000 of those superannuation funds in Person D's UniSuper account, without explaining to Person D his reason for doing so. 137. In about August 2013, a superannuation account in Person D's name was opened with Macquarie, but no superannuation funds were rolled into the Macquarie fund until January 2014. 138. On about 12 September 2013, UniSuper wrote to Person D to notify him that it had been unable to process the request to roll over Person D's "entire accumulation component less $5000" because Person D "[did] not have any balance in [his] accumulation component." 139. The superannuation funds held by Person D with UniSuper were not rolled over into the Macquarie fund subsequent to UniSuper notifying Person D that it could not process his rollover request. 140. On about 15 January 2014, Person D's superannuation in the amount of around $28,903.50 held with Catholic Super was rolled into the Macquarie fund. 141. On about 3 September 2013, insurance policies in Person D's name were taken out with Macquarie for: (a) life and disability insurance of $850,000 at a cost of $4,737.36 per year or $394.78 per month; and (b) income protection insurance of $5,962 per month at a cost of $1,955.88 per year or $162.99 per month. 142. Person D did not receive a copy of the Person D SOA, or any other written statement of advice, from El-Helou or NSG, either prior to agreeing to implement the Person D superannuation advice and the Person D insurance advice, or at all. 143. Person D was not advised by El-Helou that El-Helou had sought to leave $5,000 in Person D's UniSuper superannuation fund while requesting that the rest of the UniSuper funds be transferred to Macquarie, either prior to agreeing to implement the Person D superannuation advice, or at all. 144. Person D was not advised by El-Helou that his UniSuper superannuation funds could not be rolled over to Macquarie, either prior to agreeing to implement the Person D superannuation advice, or at all. 145. Person D was not advised by El-Helou that he held a superannuation fund with Catholic Super, or the exact amount of superannuation in that fund, either prior to agreeing to implement the Person D superannuation advice, or at all. 146. Person D was not advised by El-Helou that he already had life insurance and income protection insurance through his UniSuper superannuation fund, either prior to agreeing to implement the Person D insurance advice, or at all. Consequences of advice 147. In the period between August 2013 and 31 December 2015, Person D: (a) continued to receive his employer superannuation contributions into his UniSuper fund; (b) paid administration fees in respect of both his UniSuper superannuation fund and his Macquarie fund, including around $251.72 in fees to Macquarie out of his Macquarie fund; (c) paid around $12,848.79 in insurance premiums out of his Macquarie fund; and (d) paid around $2,904.11 in adviser fees to NSG out of his Macquarie fund. 148. In the period between around August 2013 and around 31 December 2015, the balance of Person D's superannuation which was rolled into the Macquarie fund had decreased by $11,579.92, from $28,903.50 to $17,323.58. Admissions of contraventions Contraventions of ss 961B(1) and 961G by El-Helou 149. By reason of the matters set out at paragraphs 123 to 148 above, El-Helou did not act in the best interests of Person D in relation to his advice to Person D and thereby breached s 961B(1) of the Act. 150. The advice El-Helou provided to Person D was not appropriate to Person D, in breach of s 961G of the Act, by reason of the following matters: (a) Person D's UniSuper superannuation funds were not capable of being rolled over to Macquarie to achieve Person D's objective of consolidating his superannuation funds; (b) as a result of Person D's Catholic Super funds being rolled over to Macquarie and Person D's UniSuper funds not being rolled over to Macquarie, Person D was placed in circumstances whereby his employer continued to pay contributions to his UniSuper fund, while Person D made no contributions to his Macquarie fund, and continued to pay the administration fees with respect to both funds; (c) by paying the insurance premiums out of his Macquarie fund, Person D's superannuation was being depleted and not replaced by contributions or investment income and could not grow; and (d) by reason of the failure to roll over Person D's UniSuper to Macquarie (and thereby cancel his existing insurance with UniSuper), Person D was double insured by both Macquarie and UniSuper. Contraventions of s 961L by NSG 155. In providing the Person D superannuation advice and the Person D insurance advice, El-Helou followed the new client advice process set out in paragraphs 22 to 28 above. 156. Further, at all material times during his engagement as an NSG Representative, El-Helou: (a) was subject to NSG's training systems and practices as set out in paragraphs 29 to 50 above; (b) was subject to internal and external reviews of his work as an NSG Representative in February 2012, June 2013, September 2013, and May 2015, that all identified the problems with El-Helou's compliance with financial services law as set out in paragraphs 56 to 57, 65 to 69, 75 to 76, and 90 above; and (c) after an initial three months on retainer, was remunerated entirely on a commission basis. 157. [paragraph deleted] 158. NSG admits that, by reason of the matters set out in paragraphs 22-122 and 155-156 above, NSG contravened s 961L of the Act by failing to take reasonable steps to ensure that El-Helou complied with ss 961B(1) and 961G of the Act in providing advice to Person D. (b) Contraventions relating to advice by El-Helou to NSG client Person C Relevant conduct by El-Helou with respect to Person C The Person C meeting 159. On 15 July 2014, El-Helou, as an NSG Representative, attended the home of Person C for a meeting to provide Person C with personal financial advice as a retail client (the Person C meeting). 160. At the Person C meeting, Person C told El-Helou that: (a) he was self-employed with an annual income of approximately $70,000; (b) he was renting his home; (c) he had approximately $54,000 in superannuation with AMP; (d) he was contributing about $700 per month to his superannuation; (e) he had credit card debt of about $4,000; and (f) he had a business loan of about $60,000 owing to Westpac which he took out to repay a tax debt owed by his business to the ATO. 161. At the time of the Person C meeting, Person C, unbeknownst to him, already had life insurance of $54,996.11 and disability insurance of $53,786 included within his existing AMP superannuation fund. 162. At the Person C meeting, Person C told El-Helou that his financial objectives were, relevantly, to maximise his superannuation and to make sure he had enough money for retirement. 163. At the Person C meeting, El-Helou orally advised Person C: (a) to roll his existing superannuation into a fund operated by OnePath (Person C superannuation advice); and (b) that the OnePath superannuation would include a small amount of insurance (Person C insurance advice). 164. In respect of the Person C superannuation advice, El-Helou: (a) orally advised Person C that his AMP superannuation fund was not performing for him, that OnePath was a good fund and that he had recently rolled over his own father's superannuation to the same fund; (b) did not provide Person C with any information or documents comparing his existing superannuation fund with the recommended OnePath fund; (c) did not suggest any alternative superannuation funds other than the OnePath fund; and (d) did not provide any information about the fees and costs of the recommended OnePath fund. 165. In respect of the Person C insurance advice, El-Helou: (a) orally advised Person C that the cost of the OnePath insurance would be minimal; (b) did not advise Person C that he already held life insurance and disability insurance through his existing AMP superannuation fund; (c) did not discuss with Person C, or provide any oral advice to Person C about, the appropriate level of insurance cover; (d) did not suggest any alternative insurance providers other than OnePath; and (e) did not provide any information about the fees and costs of the OnePath insurance. 166. At the Person C meeting, El-Helou did not provide Person C with any information about the commission and fees payable to El-Helou or NSG in relation to his advice and recommendations. 167. After hearing El-Helou's advice and recommendations, during the Person C meeting: (a) Person C agreed to follow El-Helou's recommendation; (b) El-Helou made a telephone call and then orally advised Person C that he had "cancelled" Person C's superannuation with AMP and that it would be rolled over to OnePath; and (c) Person C, at El-Helou's request, signed a number of forms and documents, which were then retained by El-Helou, being: (i) an authority to proceed bearing the date 15 July 2014; (ii) an incomplete document entitled Client Fact Finder dated 15 July 2014 (the Person C Fact Finder); (iii) an incomplete document entitled 'Personal statement - Insurance through Superannuation' bearing the date 15 July 2014; (iv) an incomplete National Sterling Financial Management Authority to Disclose and/or Receive Information dated 15 July 2014; (v) an incomplete One Path document entitled 'Application Forms - One Answer Frontier Personal Super' dated 15 July 2014; (vi) an incomplete Australian Government form entitled 'Request to transfer whole balance of superannuation benefits between funds' 15 July 2014; and (vii) an incomplete Australian Taxation Office Standard Choice Form bearing the date 15 July 2014. After the Person C meeting 168. Following the Person C meeting, El-Helou completed or caused to be completed the forms referred to at paragraphs 167(c)(ii)-(vii) above. 169. Following the Person C meeting, on about 25 July 2014 and 28 July 2014 respectively, El-Helou obtained or caused to be obtained quotes from OnePath and Macquarie with respect to life, disability and income protection insurance. 170. Following the Person C meeting, El-Helou prepared or caused to be prepared at NSG a document entitled 'Statement of Advice' for Person C bearing the date 15 July 2014 (Person C SOA), which was the same date as the Person C meeting and the incomplete forms signed by Person C and set out at paragraph 167(c)(ii)-(vii) above. 171. Following the Person C meeting, El-Helou, submitted or caused to be submitted on behalf of Person C the product application forms referred to at paragraphs 167(c)(ii)-(vii) above in order to implement the Person C superannuation advice and the Person C insurance advice. 172. On or about 1 August 2014, a superannuation fund in Person C's name was opened with OnePath. 173. On or about 7 August 2014, around $53,786.50 of superannuation funds held by Person C with AMP were rolled into the OnePath fund. 174. On or about 1 August 2014, insurance policies in Person C's name were taken out with OnePath for: (a) life insurance of $150,000 at a cost of $2,098.21 per year or $174.85 per month (b) disability insurance of $150,000 at a cost of $1,454.53 per year or $121.21 per month; and (c) income protection insurance of $4,375 per month at a cost of $4,103.50 per year or $341.96 per month, the total cost of all premiums being $7,656.24 per year or $638.02 per month. 175. Person C did not receive a copy of the Person C SOA, nor any other written statement of advice, from El-Helou or NSG, prior to agreeing to implement the Person C superannuation advice and the Person C insurance advice. 176. Person C was not advised by El-Helou that he already had life insurance and disability insurance through his AMP superannuation fund, either prior to agreeing to implement the Person C insurance advice, or at all. Consequences of advice 177. In the period between around August 2014 and around May 2015, when Person C cancelled his insurance policies with OnePath, Person C: (a) contributed $700 per month to his superannuation fund; (b) paid monthly insurance premiums of around $638 out of the OnePath fund; (c) paid a lump-sum adviser fee of $1,877.65 as well as ongoing adviser fees to NSG out of his OnePath fund. Admissions of contraventions Contraventions of ss 961B(1) and s 961G by El-Helou 178. By reason of the matters set out in paragraphs 159 to 177 above, El-Helou did not act in the best interests of Person C in relation to his advice to Person C and has thereby breached s 961B(1) of the Act. 179. Further, NSG admits that the advice El-Helou provided to Person C was not appropriate to Person C, in breach of s 961G of the Act because Person C did not wish to take out substantial life, disability and income protection insurance, he was not aware that such insurance was taken out in his name, and the insurance premiums depleted most of his monthly superannuation Contraventions of s 961L by NSG 180. In providing the Person C superannuation advice and the Person C insurance advice, El-Helou followed the new client advice process set out in paragraphs 22 to 28 above. 181. Further, at all material times during his engagement as an NSG Representative, El-Helou: (a) was subject to NSG's training systems and practices as set out in paragraphs 29-50 above; (b) was subject to internal and external reviews of his work as an NSG Representative in February 2012, June 2013, September 2013, and May 2015, that all identified the problems with El-Helou's compliance with financial services law as set out in paragraphs 56 to 57, 65 to 69, 75 to 76, and 90 above; and (c) after an initial 3 months on retainer, was remunerated entirely by commission. 182. NSG admits that, by reason of the matters set out in paragraphs 22-122 and 180-181 above, NSG contravened s 961L of the Act by failing to take reasonable steps to ensure that El-Helou complied with ss 961B(1) and 961G of the Act in providing advice to Person C. (c) Contraventions relating to advice by El-Helou with respect to NSG client Person E Relevant conduct by El-Helou with respect to Person E The first Person E meeting 183. On about 31 May 2012, El-Helou, as an NSG Representative, attended the home of Person E for a meeting to provide Person E with personal financial advice as a retail client (the first Person E meeting). 184. At the first Person E meeting, Person E told El-Helou that: (a) he was aged 58 years old and was looking to retire at around the age of 70; (b) he was concerned that his current superannuation fund, Plum, was not performing well and he was being charged high fees; and (c) he had approximately $120,000 in superannuation with Plum. 185. At the first Person E meeting, Person E also told El-Helou that: (a) his tax advisor had suggested that Person E obtain income protection insurance; (b) he had smoked for two or three years in his early twenties, and drank a glass of wine or beer most nights; (c) he was discharged from the army in 2001 because of heart problems; and (d) he had undergone surgery in June 2002 to replace a heart valve, had been taking and was continuing to take heart medication for aortic stenosis, and was taking medication for blood pressure. 186. Further, at the first Person E meeting, Person E told El-Helou that he and his wife [omitted]: (a) had two dependent children aged 16 and 19; (b) had a gross joint annual income of approximately $131,000; (c) owned a property outright in Elimbah, Queensland, worth about $400,000; and (d) owned an investment property in Deepdene, Victoria, valued at about $750,000 with a mortgage of about $350,000. 187. At the time of the first Person E meeting, unbeknownst to him, Person E already had insurance within his Plum superannuation fund which covered him for $59,267.43 each for life and disability, and $49,389.53 per annum in income protection insurance. Person E was paying approximately $325 per year in premiums for these policies. 188. At the first Person E meeting, Person E told El-Helou that his financial objectives were, relevantly, to ensure that he had a "decent retirement nest egg" so he could "have some comfort" about his financial position when he retired, as he was concerned he did not have sufficient savings or superannuation for retirement; and to take out some income protection insurance. 189. At the first Person E meeting, El-Helou orally advised Person E to: (a) roll over his existing superannuation into a fund operated by North Personal Superannuation (first Person E superannuation advice); and (b) take out life and TPD insurance, and income protection insurance with AXA (first Person E insurance advice). 190. In respect of the first Person E superannuation advice, El-Helou; (a) orally advised Person E that North was "a good performing fund"; (b) did not provide Person E with any information or documents comparing his existing Plum fund with the recommended North fund; (c) did not suggest any alternative superannuation funds other than the North fund; and (d) told Person E there would be an establishment fee for switching his superannuation from Plum to North, but did not provide Person E with any information about the ongoing fees charged by North. 191. In respect of the first Person E insurance advice, El-Helou: (a) did not advise Person E that he may already hold life, disability and/or income protection insurance with Plum, nor discuss whether there was an option to take out insurance with Plum; (b) did not discuss with Person E, or provide any oral advice to Person E about, the appropriate level of insurance cover; (c) did not suggest any alternative insurance provider other than AXA; (d) did not otherwise explain his reason for advising Person E to take out insurance with AXA; and (e) did not provide any information about the fees and costs of the recommended AXA insurance. 192. At the first Person E meeting, El-Helou did not provide Person E with any information about the commission and fees payable to El-Helou or NSG in relation to his advice and recommendations. 193. After hearing El-Helou's advice and recommendations, during the first Person E meeting, Person E: (a) agreed to follow El-Helou's recommendations to roll over his superannuation to North and to take out insurance with AXA; and (b) at El-Helou's request, signed a number of forms and documents, which were then retained by El-Helou, being: (i) an incomplete document entitled Client Fact Finder dated 31 May 2012 (Person E Fact Finder); and (ii) an incomplete AXA document entitled 'AXA Elevate Application Summary Form', dated 8 June 2012 (AXA Application Form). After the first Person E meeting 194. Following the first Person E meeting, El-Helou completed or caused to be completed the forms referred to at paragraph 193(b) above. 195. Following the first Person E meeting, El-Helou prepared or caused to be prepared at NSG a document entitled 'Statement of Advice Risk Insurance' for Person E bearing the date 31 May 2012 (first Person E SOA), which was the same date as the Person E meeting and the incomplete forms signed by Person E and set out at paragraph 193(b) above. 196. Following the first Person E meeting, El-Helou submitted or caused to be submitted the AXA Application Form referred to at paragraph 193(b)(ii) above, in order to implement the first Person E insurance advice. 197. On or about 12 June 2012, a superannuation account in Person E's name was opened with North. 198. On or about 2 July 2012, Person E's superannuation held with Plum was rolled into his superannuation fund held with North. 199. On or about 18 June 2012, a policy in Person E's name was taken out with AXA for life and disability insurance cover of $200,000 each, and income protection insurance cover of $71,520 per year, at a total cost of $6,276 in premiums per annum. 200. Person E did not receive a copy of the first Person E SOA, or any other written statement of advice, from El-Helou or NSG either prior to agreeing to implement the first Person E superannuation advice and the first Person E insurance advice, or at all. 201. Person E was not advised by El-Helou that he already had life, disability, and income protection insurance through his Plum superannuation fund, either prior to agreeing to implement the first Person E insurance advice, or at all. The second Person E meeting 202. On 15 July 2013, El-Helou, as an NSG Representative, attended Person E's home for a meeting to provide Person E with personal financial advice as a retail client (the second Person E meeting). 203. Before the second Person E meeting, El-Helou told Person E by telephone that: (a) North had recently been taken over by AMP and accordingly, it was a good opportunity for Person E to review his superannuation and insurance; (b) Person E should increase the insurance within his superannuation; and (c) the cost of the premiums would be covered by any additional contributions made by Person E to the superannuation fund, so Person E would not be out of pocket. 204. At the second Person E meeting, Person E told El-Helou that: (a) he wanted a similar type of investment portfolio within his superannuation that he had with North; and (b) he wanted the same level of insurance cover as he had with AXA. 205. At the second Person E meeting, El-Helou orally advised Person E: (a) to roll his existing superannuation with North into a fund operated by Macquarie (second Person E superannuation advice); and (b) to switch his life, TPD, and income protection insurance from AXA to Macquarie (second Person E insurance advice). 206. In respect of the second Person E superannuation advice, El-Helou; (a) did not explain to Person E why Macquarie was preferable to the North fund; (b) did not provide Person E with any information or documents comparing his existing North fund with the recommended Macquarie fund; (c) did not suggest any alternative superannuation funds other than Macquarie; and (d) told Person E there would be a rollover fee for switching his superannuation from North to Macquarie; but did not quantify the rollover fee, or tell Person E whether there would be any other fees charged by Macquarie in respect of the superannuation fund. 207. In respect of the second Person E insurance advice, El-Helou: (a) did not discuss with Person E any insurance providers other than Macquarie; (b) did not provide Person E with a document or information that compared the proposed Macquarie insurance with his existing AXA insurance; (c) did not discuss with Person E or provide any oral advice about the increased level of income protection, TPD, and life insurance cover he would require; and (d) did not provide any information about the fees and costs of the recommended and increased level of Macquarie insurance cover. 208. At the second Person E meeting, El-Helou did not provide Person E with any information about the commission and fees payable to El-Helou or NSG in relation to his advice and recommendations. 209. After hearing El-Helou's advice and recommendations, during the second Person E meeting, Person E: (a) agreed to follow El-Helou's recommendations to roll over his superannuation to Macquarie and to take out insurance with Macquarie; and (b) at El-Helou's request, signed a number of forms and documents, which were then retained by El-Helou, being: (i) an incomplete document entitled 'Choice of Superannuation Fund Standard Choice' dated 15 June 2013; (ii) an incomplete document entitled 'Personal Statement - Insurance Through Superannuation' dated 15 July 2013; and (iii) an incomplete document entitled 'Macquarie Life New Business Application' dated 15 July 2013 (Macquarie Application Form). After the second Person E meeting 210. Following the second Person E meeting, El-Helou completed or caused to be completed the forms referred to at paragraph 209(b) above. 211. Following the second Person E meeting, El-Helou prepared or caused to be prepared at NSG a document entitled 'National Sterling Statement of Advice' for Person E bearing the date 15 July 2013 (second Person E SOA), which was the same date as the second Person E meeting and the incomplete forms signed by Person E and set out at paragraph 209(b) above. 212. In preparing the second Person E SOA, El-Helou: (a) relied on the information provided to him by Person E during the first Person E meeting about Person E's objectives, financial situation and needs as recorded by El-Helou in the Person E Fact Finder and the AXA Application Form; and (b) did not seek or obtain updated information about Person E's objectives, financial situation and needs. 213. Following the second Person E meeting, El-Helou submitted or caused to be submitted the Macquarie Application Form referred to at paragraph 209(b)(iii) above in order to implement the second Person E insurance advice. 214. On or after 15 July 2013, a superannuation account in Person E's name was opened with Macquarie. 215. On or about 12 August 2013, Person E's superannuation held with North was rolled into his superannuation fund held with Macquarie. 216. On a date after the second Person E meeting, Person E was required by Macquarie to attend a medical examination. This took place at Person E's workplace. At the medical examination, Person E provided the examiner with his medical history including his heart operation in 2002, and his heart condition and related medication, as set out in paragraph 185 above. 217. On a date not now known, but after the medical examination, El-Helou telephoned Person E and told him that: (a) Macquarie was not prepared to provide him with income protection insurance; and (b) El-Helou would be able to increase Person E's cover on his life insurance "at no extra cost". 218. On or about 30 July 2013, a policy in Person E's name was taken out with Macquarie for life insurance cover of $375,000 at a cost of $6,935.94 in premiums per annum. 219. In September 2013, Person E was advised by Macquarie that Macquarie declined to provide Person E with income protection or disability insurance due to his pre-existing heart condition, which had not been disclosed on his application for insurance. 220. Person E did not receive a copy of the second Person E SOA, or any other written statement of advice, from El-Helou or NSG, before agreeing to implement the second Person E superannuation advice and the second Person E insurance advice, or at all. Consequences of advice 221. In the period between around 12 August 2013 to 30 June 2015, Person E: (a) contributed $26,791.05 comprising superannuation guarantee contributions and salary sacrifice contributions to his Macquarie fund; (b) paid $14,508.52 in insurance premiums from his Macquarie fund; and (c) paid $7,165.58 in upfront and ongoing fees to NSG from his Macquarie fund. Admissions of contraventions Contraventions of ss 961B(1) and 961G by El-Helou 222. By reason of the matters set out at paragraphs 183 to 221 above, El-Helou did not act in the best interests of Person E in relation to his advice to Person E in 2013, and thereby breached s 961B(1) of the Act. 223. Further, NSG admits that the advice El-Helou provided to Person E in 2013 was not appropriate to Person E, in breach of s 961G of the Act, by reason that: (a) El-Helou failed to disclose to AXA and to Macquarie that Person E suffered from a pre-existing heart condition. As a result, Person E was left without disability and income protection insurance, and was deprived of the disability and income protection insurance he held with Plum; and (b) by paying insurance premiums and adviser fees out of his Macquarie fund that were higher than Person E's and his employer's contributions, Person E's superannuation was being depleted, in circumstances where he was concerned about the adequacy of his superannuation for retirement. Contraventions of s 961L by NSG 224. In providing the second Person E superannuation advice and the second Person E insurance advice, and to the extent El-Helou relied on information gathered in the 2012 meeting in providing the 2013 advice, El-Helou followed the new client advice process set out in paragraphs 22 to 28 above. 225. Further, at all material times during his engagement as an NSG Representative, El-Helou: (a) was subject to NSG's training systems and practices as set out in paragraphs 29 to 50 above; (b) was subject to internal and external reviews of his work as an NSG Representative in February 2012, June 2013, September 2013, and May 2015, that all identified the problems with El-Helou's compliance with financial services law as set out in paragraphs 56 to 57, 65 to 69, 75 to 76, and 90 above; and (c) after a period of three months on retainer, was remunerated entirely by commission. 226. NSG admits that, by reason of the matters set out in paragraphs 22-122 and 224-225 above, NSG contravened s 961L of the Act by failing to take reasonable steps to ensure that El-Helou complied with ss 961B(1) and 961G of the Act in providing advice to Person E. (d) Contraventions relating to advice by Chenh to NSG client Person G Relevant conduct by Chenh with respect to Person G Person G Meeting 227. On 13 July 20134, Person G spoke with an NSG employee who arranged an appointment with an adviser. 228. On 15 July 20134, Chenh, as an NSG Representative, attended the home of Person G for a meeting to provide Person G with personal financial advice as a retail client (Person G meeting). 229. At the Person G meeting, Person G told Chenh that: (a) after a long period of full-time work in the banking sector, she was now studying nursing part-time, and working casually as a pathology collector, with an annual income of $19,000 net (inclusive of superannuation); (b) she owned her home in Endeavour Hills, Victoria, outright, which was then valued at about $430,000; and (c) she had approximately $220,000 in two superannuation funds, comprised of approximately $180,000 in a retail fund with Commonwealth Bank of Australia (CBA) and $40,000 in an industry fund with HESTA. 230. At the Person G meeting, Person G provided Chenh with copies of her most recent superannuation statements, as well as copies of identification documents showing her age, and her tax file number. 231. At the Person G meeting, Person G told Chenh her financial objectives were, relevantly: (a) to get a better return on her superannuation since her super had not grown substantially following injuries and time off work in 2006 and 2007; (b) to find out, based on her current financial position, whether she had enough superannuation to retire on; and (c) to protect her existing superannuation balance, and not to lose any money as a result of a rollover of her superannuation to an alternative fund. 232. At the Person G meeting, Chenh orally advised Person G to roll over her CBA superannuation into a fund with MLC called Horizon 4 (Person G superannuation advice). 233. In respect of the Person G superannuation advice, Chenh: (a) orally advised Person G that the MLC fund was "a great fund" that would meet Person G's financial objectives because it had a preserved principal amount which would be protected, and the interest earned on the fund would be added to the preserved amount every six months; (b) orally advised Person G that the MLC fund provided better returns compared with Person G's existing CBA fund; (c) did not otherwise provide any information about the administrative fees of the recommended MLC fund; (d) did not provide Person G with any information or documents comparing her existing superannuation funds to the recommended MLC fund; (e) did not suggest any other superannuation funds other than the MLC fund; and (f) stated there would be a cooling-off period while NSG completed a written statement of advice and other relevant paperwork for the superannuation rollover and sent it to Person G for her review. 234. At the Person G meeting, Chenh told Person G that MLC would pay him a trailing commission for opening an account with them on Person G's behalf, but Person G would not herself have to pay any fees to Chenh or NSG. 235. After hearing Chenh's advice and recommendations during the Person G meeting, Person G: (a) agreed to follow Chenh's recommendations with respect to superannuation, subject to the cooling-off period; and (b) at Chenh's request, signed and dated a number of forms and documents, which were then retained by Chenh, including: (i) an authority to proceed dated 15 July 2014; (ii) an incomplete document entitled Client Fact Finder bearing the date 15 July 2014 (Person G Fact Finder); and (iii) an incomplete MLC Application Form bearing the date 15 July 2014 (MLC Application Form). After the Person G meeting 236. Following the Person G meeting, Chenh: (a) completed or caused to be completed the forms referred to at paragraph 235(b)(ii) and (iii) above; and (b) arranged for another NSG employee, Michael Decorrado, to sign the MLC Application Form bearing the date 15 July 2014, purportedly as a witness of Person G's signature. 237. Following the Person G meeting, Chenh prepared or caused to be prepared at NSG a document entitled Statement of Advice bearing the date 15 July 2014 (Person G SOA), which was the same date as the Person G meeting and the incomplete forms signed by Person G and set out at paragraph 235(b)(ii) and (iii) above. 238. On or about 21 July 2014, Chenh's lodgement was rejected by NSG's Verifications Department, on the basis that Chenh was required to confirm whether Person G had insurance through her current superannuation fund. Chenh subsequently confirmed that Person G had no existing insurance. 239. Following the Person G meeting, Chenh submitted or caused to be submitted on behalf of Person G the MLC Application Form in order to implement the Person G superannuation advice. 240. On about 31 July 2014, unbeknownst to Person G, a superannuation fund in Person G's name was open with MLC, and the sum of $179,985.22, being the full amount of Person G's superannuation held with CBA, was rolled over from CBA to MLC. 241. Person G did not receive a copy of the Person G SOA, or any other written statement of advice from Chenh or NSG before the Person G superannuation advice was implemented. 242. Person G received a copy of the Person G SOA on 27 August 2014 following a conversation with an NSG employee. 243. On 28 August 2014 Person G lodged a formal complaint with NSG. 244. On 29 October 2014 Person G received a further SoA. Post-implementation events 245. Shortly after the rollover of her funds from CBA to MLC, Person G received an account statement from MLC as at 30 July 2014, which showed that: (a) an annual adviser service fee of 0.55 per cent had been charged to her superannuation account with MLC; and (b) a one-off adviser fee of $3,851.83 had been deducted from the balance of her superannuation account with MLC (the adviser fees). 246. Shortly after Person G learnt of the adviser fees, she contacted MLC and informed them that the adviser fees had not been disclosed to Person G by Chenh and NSG, after which MLC agreed to waive, and did waive, the adviser fees. 247. In early August 2014, Person G received an account statement from MLC as at 1 August 2014, which showed that the balance in her superannuation had dropped from the rolled over amount of $179,985.22 to $178,520.94, being a reduction of $1,464.28. 248. Subsequently, in August 2014: (a) Person G contacted MLC's Investment Protection Department by telephone, and was advised by MLC that Person G was not eligible to have her funds in a capital protected investment because Person G was not yet 50 years of age at the time; (b) Person G then contacted Chenh by telephone on two occasions about the drop in her superannuation balance at MLC, and Chenh advised Person G that MLC had made a mistake and that he would arrange for MLC to move Person G's superannuation from the Horizon 4 fund to the Horizon 2 fund which would preserve her principal; and (c) Person G received a letter from Chenh dated 8 August 2014 which stated that there was an error with Person G's MLC account "in terms of its asset allocation not being placed in the appropriate option" but that this was now reversed and her funds had been moved from MLC Horizon 4 to MLC Horizon 2, which was a "Capital Stable Portfolio". 249. On or about 14 August 2014, Person G's superannuation funds were rolled over from the MLC Horizon 4 to MLC Horizon 2 fund. 250. After her superannuation funds were rolled over from the Horizon 4 fund to the Horizon 2 fund, Person G spoke to Ms Heffernan at MLC, and was advised that she was not eligible for a capital protected fund as she was not yet 50 years of age, and that the switch to MLC Horizon 2 meant that Person G's funds had been moved to a lower risk fund, but it would not protect the principal. 251. Following the telephone conversation referred to in the preceding paragraph, Person G spoke to Chenh and asked him to speak directly with MLC to sort out the issue of whether Person G was eligible for a capital protected superannuation fund with MLC. 252. Person G did not hear from Chenh again. 253. On around 20 October 2014, Person G rolled her superannuation of $177,426.48 out of her MLC fund and into her HESTA fund, as she was not eligible to re-enter the CBA superannuation fund once she had rolled out of it. 254. On 23 October 2014, following a request by Person G, CBA advised Person G that had she left her superannuation with CBA, the balance of her fund would have been $180,819.28 as at 16 October 2014. 255. Person G subsequently made a formal complaint to NSG, and was compensated by Chenh personally, in accordance with NSG's internal policies and procedures, in the amount of $3,378.02 as follows: (a) the sum of $2,558.74, being the difference in value of her CBA fund balance on 30 July 2014, and the value of her MLC Horizon 2 fund on 20 October 2014; and (b) the sum of $819.28 in lost investment earnings on her CBA superannuation account between the period July 2014 to October 2014. Admissions of contraventions Contraventions of ss 961B(1) and 961G by Chenh 256. By reason of the matters set out at paragraphs 227 to 255 above, Chenh did not act in the best interests of Person G in relation to his advice to Person G and has thereby breached s 961B(1) of the Act. 257. Further, NSG admits that the advice Chenh provided to Person G was not appropriate to Person G, in breach of s 961G of the Act, by reason that Person G's CBA superannuation funds could not be placed in a capital-protected investment with MLC, when Person G's objective was to protect the principal of her CBA superannuation. Contraventions of s 961L by NSG 258. In providing the Person G superannuation advice, Chenh followed the new client advice process set out in paragraphs 22 to 28 above. 259. Further, at all material times during his engagement as an NSG Representative, Chenh: (a) was subject to NSG's training systems and practices as set out in paragraphs 29 to 50 above; (b) was subject to the review of his work as an NSG Representative by Assured in May 2015, which identified problems with his compliance with financial services law as set out in paragraph 90 above; and (c) was remunerated entirely by commission. 260. NSG admits that, by reason of the matters set out in paragraphs 22-122 and 258 to 259 above, NSG contravened s 961L of the Act by failing to take reasonable steps to ensure that Chenh complied with s 961B(1) and s 961G of the Act in providing advice to Person G. (e) Contraventions relating to advice by Chenh to NSG client Person F Relevant conduct by Chenh with respect to Person F Person F Meeting 261. On 24 November 2014, Chenh, as an NSG Representative, attended the home of Person F for a meeting to provide Person F with personal financial advice as a retail client (Person F meeting). 262. At the Person F meeting, Person F told Chenh that: (a) she held superannuation of approximately $90,000 with TelstraSuper; (b) she had life and disability insurance of approximately $262,832.80 and income protection insurance of approximately $5,173.06 per month through TelstraSuper; (c) she and her husband [omitted] owned their home in Mentone outright; and (d) she and her husband [omitted] had an investment property, which at the time was worth about $500,000 and was subject to a small mortgage. 263. At the Person F meeting, Person F showed Chenh her recent TelstraSuper superannuation statement (the Person F TelstraSuper Statement), and her driver's licence, and Chenh took copies of these documents with his mobile telephone. 264. At the Person F meeting, Person F told Chenh that she was seeking advice about rolling over her TelstraSuper superannuation into a better performing fund, that she and her husband were interested in purchasing a second investment property, and that she did not want any insurance because she was being made redundant in a few weeks. 265. At the Person F meeting, Chenh acknowledged, by reference to the Person F TelstraSuper Statement, that Person F had life insurance, disability insurance and income protection insurance through her TelstraSuper superannuation fund. 266. At the Person F meeting, Chenh orally advised Person F to roll her existing superannuation in two parts into an IOOF superannuation fund, starting with an initial amount of $8,000, because there were tax benefits associated with this approach (Person F superannuation advice). 267. In respect of the Person F superannuation advice, Chenh: (a) orally advised Person F that IOOF was a safe fund and had performed well, and that TelstraSuper was not a good performer; (b) did not provide Person F with any information or documents comparing her existing superannuation funds with the recommended IOOF fund; (c) did not suggest any alternative superannuation funds other than the IOOF fund; and (d) did not provide any information about the fees and costs of the recommended IOOF fund. 268. At the Person F meeting, Chenh orally advised Person F that his services were free, that he did not receive a commission from IOOF and that there was no rollover fee for transferring her superannuation from TelstraSuper to IOOF. 269. After hearing Chenh's advice and recommendations, during the Person F meeting, Person F: (a) agreed to follow Chenh's recommendation to roll over her superannuation to an IOOF fund in two parts; and (b) at Chenh's request signed a number of forms and documents, which were then retained by Chenh, being: (i) an authority to proceed bearing the date 24 November 2014; (ii) an incomplete document entitled 'Client Fact Finder' bearing the date 24 November 2014 (Person F Fact Finder); and (iii) an incomplete document entitled 'Personal statement - Insurance through Superannuation' bearing the date 24 November 2014. After the Person F meeting 270. Following the Person F meeting, Chenh: (a) completed or caused to be completed the documents referred to at paragraphs 269(b)(ii)-(iii) above and the following documents: (i) a document entitled 'IOOF Application for Personal Superannuation - Form A' bearing the date 24 November 2014; (ii) a document entitled 'IOOF Pursuit Focus - Form B' bearing the date 24 November 2014; (iii) a document entitled 'IOOF Pursuit Focus - Form B' bearing the date 24 January 2015; (iv) a document entitled 'IOOF Binding Death Nomination - Form C' bearing the date 24 November 2014; (v) a document entitled '36. Policy Declaration' bearing the date 24 November 2014; (vi) an undated document entitled '37. Medical Evidence Authority'; (vii) an Australian Government form entitled 'Request to transfer whole balance of superannuation benefits between funds' dated 24 November 2014; (viii) two versions of a document entitled 'Authority to Disclose and/or Receive information' bearing the date 24 November 2014 and 24 December 2014; (ix) an Australian Government Standard Choice Form bearing the date 24 November 2014; and (x) a document entitled 'TAL Accelerated Protection Application Summary' bearing the date 3 December 2014; (b) copied or arranged to have copied Person F's signature on the documents referred to at paragraphs 270(a)(i)-(ix) above; and (c) arranged for another NSG employee, Jeromy Gratian, to sign the document entitled 'IOOF Binding Death Nomination - Form C' bearing the date 24 November 2014 purportedly as a witness of Person F's signature. 271. Following the Person F meeting, on or about 1 December 2014, Chenh obtained or caused to be obtained quotes from TAL, Macquarie and OnePath with respect to life insurance, disability insurance and income protection insurance. 272. Following the Person F meeting, Chenh prepared or caused to be prepared at NSG a document entitled 'Statement of Advice' for Person F bearing the date 24 October 2014 (Person F SOA), which was the same date as the Person F meeting and the forms set out at paragraphs 269(b)(i)-(iii) and 270(a)(i)-(x). 273. Following the Person F meeting, Chenh submitted or caused to be submitted on behalf of Person F the product application forms referred to at paragraphs 270(a)(i)-(x) above in order to implement the Person F superannuation advice as well as to take out life insurance and disability insurance on behalf of Person F with TAL, despite Person F stating at the Person F meeting that she did not want any insurance. 274. In about November 20145, a superannuation account in Person F's name was opened with IOOF. 275. On around 4 December 2014, Person F's superannuation in the amount of around $103,090.61 held with TelstraSuper was rolled into her superannuation fund held with IOOF, despite the fact that Chenh had recommended to Person F at the Person F meeting to effect the rollover to IOOF in two separate transactions for tax reasons. 276. On around 8 December 2014, insurance policies in Person F's name were taken out with TAL for life insurance and disability insurance of $350,000 and income protection insurance of $3,750 per month at a cost of $5,143.68 per year or $428.64 per month. 277. Person F did not receive a copy of the Person F SOA, or any other written statement of advice from Chenh or NSG in relation to Chenh's advice and product recommendations. 278. Person F was not advised by Chenh, prior to Chenh taking out life insurance, disability insurance and income protection insurance in Person F's name, that he proposed to do so. Consequences of advice 279. In the period between around 4 December 2014 and around 30 June 2015: (a) Person F paid $3,000.48 in insurance premiums to TAL out of her IOOF fund for life insurance, disability insurance and income protection insurance taken out in her name by Chenh; and (b) the balance of Person F's superannuation which was rolled into the IOOF fund had decreased by $5,077.83 to $98,012.78. Admissions of contraventions Contraventions of ss 961B(1) and 961G by Chenh 280. By reason of the matters set out at paragraphs 261 to 279 above, Chenh did not act in the best interests of Person F in relation to his advice to Person F and has thereby breached s 961B(1) of the Act. 281. Further, NSG admits that the advice Chenh provided to Person F was not appropriate to Person F, in breach of s 961G of the Act, by reason of the following matters: (a) Person F did not require life insurance, disability insurance and income protection insurance, particularly in circumstances where she was about to be made redundant; and (b) by paying insurance premiums out of her IOOF superannuation, Person F's superannuation was being depleted. Contraventions of s 961L by NSG 282. In providing advice to Person F, Chenh followed the new client advice process set out in paragraphs 22 to 28 above. 283. Further, at all material times during his engagement as an NSG Representative, Chenh: (a) was exposed to NSG's training systems and practices as set out in paragraphs 29 to 50 above; and (b) was remunerated entirely by commission. 284. NSG admits that, by reason of the matters set out in paragraphs 22-122 and 282-283 above, NSG contravened s 961L of the Act by failing to take reasonable steps to ensure that Chenh complied with ss 961B(1) and 961G of the Act in providing advice to Person F. (f) Contraventions relating to advice by Heneric to NSG client Person H Relevant conduct by Heneric with respect to Person H Person H meeting 285. On 20 August 2013, Heneric, as an NSG Representative, attended the home of Person H for a meeting to provide Person H with personal financial advice as a retail client (Person H meeting). 286. At the Person H meeting, Person H told Heneric that: (a) she had approximately $113,594 in superannuation held with the Health Industry Plan Superannuation Fund (HIP Super Fund); (b) she had accumulated pension funds of approximately £5,000 held in the United Kingdom (UK pension funds); (c) she was concerned that she did not have enough superannuation to retire on and she was concerned to preserve her existing superannuation; (d) she had life and disability insurance within the HIP Super Fund which provided a total benefit amount of $23,160 at a monthly premium cost of $33.83 per month; (e) her annual salary was approximately $140,000 and her monthly income after tax was approximately $6,800; and (f) she had approximately $47,000 in savings, held approximately $400,000-$500,000 in equity in her home and had a mortgage of $500,000, and her monthly mortgage repayments were approximately $3,400. 287. At the Person H meeting, Person H told Heneric that: (a) her financial objective was to roll her existing Australian superannuation into a fund that would accept her pension from the United Kingdom; and (b) she did not want to take out life insurance or income protection insurance, as insurance was not a financial priority for her, and in the event of her death there was sufficient equity in her home so that her adult children could sell her home to pay her debts. 288. At the Person H meeting, Heneric orally advised Person H: (a) to roll all of her existing superannuation held with the HIP Super Fund into a fund operated by IOOF (Person H superannuation advice); and (b) to take out life and disability insurance (Person H insurance advice). 289. In respect of the Person H superannuation advice, Heneric: (a) orally advised Person H that IOOF was a suitable fund that would accept her UK pension funds; (b) did not provide Person H with any information or documents comparing her HIP superannuation fund with the recommended IOOF fund; (c) did not suggest any alternative superannuation funds other than the IOOF fund; and (d) did not provide any information about the fees and costs of the recommended IOOF fund. 290. In respect of the Person H insurance advice, Heneric: (a) orally advised Person H that in order for her to rollover her UK pension fund into an Australian superannuation fund, IOOF required her to take out an insurance policy; (b) did not identify or recommend a particular insurance provider; (c) did not discuss with Person H, or provide any oral advice to her, about the appropriate level of insurance cover; and (d) did not provide any information about the fees and costs of any policy. 291. At the Person H meeting, Heneric did not provide Person H with any information about the commission and fees payable to Heneric or NSG in relation to his advice and recommendations. 292. After hearing Heneric's advice and recommendations during the Person H meeting, Person H: (a) agreed to follow Heneric's recommendations with respect to superannuation and insurance; (b) instructed Heneric to take out a life and disability insurance policy that would meet the requirements of IOOF and had the lowest premiums available; and (c) at Heneric's request, signed a number of incomplete forms and documents, which were then retained by Heneric, being: (i) an incomplete document entitled Client Fact Finder bearing the date 20 August 2013 (Person H Fact Finder); (ii) an incomplete document entitled Personal Statement - Insurance Through Superannuation dated 20 August 2013; and (iii) an incomplete document entitled TAL Accelerated Protection Application Summary (TAL Application). After the Person H meeting 293. Following the Person H meeting, Heneric completed or caused to be completed the forms referred to at paragraph 292(c) above. 294. Following the Person H meeting, Heneric prepared or caused to be prepared at NSG a document entitled Statement of Advice bearing the date 20 August 2013 (Person H SOA), which was the same date as the Person H meeting, and the incomplete forms signed by Person H and set out at paragraph 292(c) above. 295. Following the Person H meeting, Heneric submitted or caused to be submitted on behalf of Person H application forms and documents, including the TAL Application, in order to implement the Person H superannuation advice and the Person H insurance advice. 296. On about 27 August 2013, a superannuation account in Person H's name was opened with IOOF. 297. On about 30 August 2013, TAL wrote to Heneric at NSG stating that Person H's premium for life and TPD insurance had increased from $399.60 per month to $523.72 per month because of her pre-existing osteoporosis. 298. On about 6 September 2013, a policy in Person H's name was taken out with TAL for life and disability insurance of $200,000 at a cost of $6,284.64 per year. 299. On about 12 September 2013, Person H's superannuation held with the HIP Super Fund was rolled into her new IOOF fund. 300. Person H did not receive a copy of the Person H SOA, or any other written statement of advice from Heneric or NSG either prior to agreeing to implement the Person H superannuation advice and the Person H insurance advice, or at all. 301. Person H was not advised by Heneric that her insurance premiums had increased by from $399.60 per month to $523.72 per month because of her pre-existing osteoporosis. The telephone conversation 302. About 7 months after the Person H meeting, in about March 2014, Heneric contacted Person H by telephone (the telephone conversation) and had a conversation in which he advised that IOOF would not accept her UK pension fund, and recommended that she roll over her superannuation to Macquarie (revised Person H advice). 303. Heneric did not otherwise seek or obtain updated information or instructions from Person H about her objectives, financial situation, or needs. 304. In respect of the revised Person H advice, Heneric: (a) did not provide Person H with any information or documents comparing her existing IOOF superannuation fund with the recommended Macquarie fund; (b) did not suggest any alternative funds other than the Macquarie fund; and (c) did not provide any information about the fees and costs of the recommended Macquarie fund. 305. Heneric did not provide Person H with any information about the commission and fees payable to Heneric or NSG in relation to the revised Person H advice and recommendations, during the telephone conversation or afterwards. 306. After hearing Heneric's advice and recommendations given in the telephone conversation, Person H agreed to follow Heneric's recommendations. 307. Shortly after the telephone conversation, Heneric posted a number of forms and documents to Person H, and then telephoned her and instructed that the paperwork needed to be completed urgently, and said that she should sign the forms and he would collect them in person from her home. 308. Person H signed a number of incomplete forms and documents, which were collected and retained by Heneric, including a document entitled 'Personal Statement - Insurance Through Superannuation' dated 1 April 2014 (2014 Personal Statement). After the telephone conversation 309. Following the telephone conversation, Heneric prepared or caused to be prepared at NSG a document entitled 'Statement of Advice' for Person H bearing the date 1 April 2014 (Revised Person H SOA), which was the same date as the date on which Heneric collected a number of forms from Person H's home as set out in paragraph 308 above, and the 2014 Personal Statement signed by Person H. 310. On about 22 April 2014, a superannuation account in Person H's name was opened with Macquarie. 311. On about 23 April 2014, a policy in Person H's name was taken out with Macquarie for life and disability insurance of $200,000 and $160,000 respectively at an annual premium cost of $4,442.54. 312. On about 2 May 2014, Person H's IOOF superannuation of $116,587.63 was rolled into the Macquarie fund. 313. On about 5 June 2014, Person H's UK pension funds of $11,036.85 were rolled into the Macquarie fund. 314. Person H did not receive a copy of the Revised Person H SOA, or any other written statement of advice from Heneric or NSG prior to agreeing to implement the revised Person H superannuation advice, or prior to Heneric taking out insurance with Macquarie on her behalf. Consequences of advice 315. In the period between 27 August 2013 and 29 April 2014, Person H: (a) received employer contributions of $5,536.10 to her IOOF superannuation fund; (b) paid adviser fees of $5,252.27 from her IOOF superannuation fund, which included a $4,657.39 upfront member advice fee and ongoing member advice fees of $357.62; and (c) paid a total of $3,666.04 in insurance premiums from her IOOF superannuation fund. 316. In the period between 22 April 2014 and 23 April 2015, Person H: (a) received employer contributions of $5,560.64 to her Macquarie superannuation fund; (b) paid adviser fees of $690.15 from her Macquarie superannuation fund; and (c) paid a total of $3,915.50 in insurance premiums from her Macquarie superannuation fund. Admissions of contraventions Contraventions of ss 961B(1) and 961G by Heneric 317. By reason of the matters set out in paragraphs 285 to 316 above, Heneric did not act in the best interests of Person H in relation to his advice to Person H and has thereby breached s 961B(1) of the Act. 318. Further, NSG admits that the advice Heneric provided to Person H was not appropriate to Person H, in breach of s 961G of the Act, by reason of the following matters: (a) Person H's UK pension funds were not capable of being rolled over to IOOF to achieve Person H's objective of consolidating her Australian and UK superannuation funds; (b) Person H did not wish to take out life and disability insurance; and (c) by paying the insurance premiums out of her IOOF and then Macquarie funds, Person H's superannuation was being depleted in circumstances where she was concerned she did not have adequate or sufficient superannuation and wanted to preserve the balance. Contraventions of s 961L 319. In providing the Person H superannuation advice, the Person H insurance advice, and the revised Person H advice, Heneric followed the new client advice process set out in paragraphs 22 to 28 above. 320. Further, at all material times during his engagement as an NSG Representative, Heneric: (a) was subject to NSG's training systems and practices as set out in paragraphs 29 to 50 above; and (b) was remunerated entirely by commission, after being paid an initial retainer of $30,000 in his capacity as a trainee. 321. NSG admits that, by reason of the matters set out in paragraphs 22-122 and 319-320 above, NSG contravened s 961L of the Act by failing to take reasonable steps to ensure that Heneric complied with ss 961B(1) and 961G of the Act in providing advice to Person H. (g) Contraventions relating to advice by Trinh to NSG client Person A Relevant conduct by Trinh with respect to Person A Person A Meeting 322. On 19 July 2013, Trinh, as an NSG Representative, attended the home of Person A for a meeting to provide Person A with personal financial advice as a retail client (the Person A meeting). 323. At the Person A meeting, Person A told Trinh that: (a) she had an annual gross income of approximately $66,000; (b) she held superannuation of at least $52,078 across a number of different superannuation funds which included Mercer, OnePath and other funds the names and details of which she could not recall; (c) she and her husband, [omitted], owned their home, which had a value of approximately $800,000 and which was subject to a mortgage of approximately $300,0000; and (d) she and [omitted] owned an investment property in Victoria which had a value of approximately $420,000 that was also subject to a mortgage, the amount of which Person A did not recall at the time. 324. At the time of the Person A meeting, Person A, unbeknownst to her had: (a) an AMP Retirement Savings superannuation fund, which included life insurance of $1,972.08; (b) an AMP Super Directions superannuation fund, which included life insurance and disability insurance of $1,296.26; (c) life insurance and disability insurance of $143,031.95 included in her Mercer superannuation fund at a cost of $300 per year; and (d) life insurance and disability insurance of $23,198.19 included in her OnePath superannuation fund. 325. At the Person A meeting, Person A provided Trinh with: (a) a Mercer superannuation statement dated 30 June 2012 (the Person A Mercer Statement), which showed that she had the insurance referred to at paragraph 324(c) above; and (b) a OnePath superannuation statement dated 1 August 2012 (the Person A OnePath Statement), which showed that she had the insurance referred to at paragraph 324(d). 326. At the Person A meeting, Trinh orally advised Person A to: (a) roll over all of her existing superannuation into a fund operated by Macquarie (Person A superannuation advice); and (b) take out life and disability insurance in the sum of $300,000 with Macquarie (Person A insurance advice). 327. In respect of the Person A superannuation advice, Trinh: (a) orally advised Person A that her superannuation was not working for her; (b) orally advised Person A that he recommended a rollover of Person A's superannuation funds to Macquarie because it was a fund that had the best returns; (c) orally informed Person A that he could perform a lost super search with respect to other superannuation funds held by Person A and consolidate her superannuation into one fund; (d) did not provide Person A with any information or documents comparing her existing superannuation funds with the recommended Macquarie fund; (e) did not discuss whether there may be a possibility of trying to get a better return using Person A's existing superannuation funds; (f) did not suggest any alternative superannuation funds other than the Macquarie fund; and (g) did not provide any information about the fees and costs of the recommended Macquarie fund. 328. In respect of the Person A insurance advice, Trinh: (a) orally advised Person A that any insurance premiums would be paid out of Person A's superannuation; (b) did not advise Person A that she already held life insurance and disability insurance through her existing OnePath and Mercer superannuation funds; (c) did not discuss the option of taking out additional insurance with Person A's existing superannuation funds; (d) did not discuss the option of paying for insurance directly rather than having premiums deducted from Person A's superannuation; (e) did not explain how he calculated the recommended insurance cover of $300,000; (f) did not suggest any alternative insurance providers; (g) did not explain that the premiums payable in respect of insurance would deplete Person A's superannuation; (h) did not compare Person A's existing insurance with the recommended insurance with Macquarie; (i) did not otherwise explain his reason for advising Person A to take out insurance with Macquarie; and (j) did not provide any information about the fees and costs of the recommended Macquarie insurance. 329. At the Person A meeting, Trinh did not provide Person A with any information about the commission and fees payable to Trinh or NSG in relation to his advice and recommendations. 330. After hearing Trinh's advice and recommendations, during the Person A meeting, Person A: (a) agreed to follow Trinh's recommendations to roll over her superannuation to Macquarie and to take out insurance through the Macquarie super fund; and (b) at Trinh's request, signed a number of incomplete forms and documents, which were then retained by Trinh, being: (i) an authority to proceed bearing the date 19 July 2013; (ii) an incomplete document entitled Client Fact Finder bearing the dates 18 June 2013 and 19 July 2013 (Person A Fact Finder); (iii) an incomplete document entitled 'Personal statement - Insurance through Superannuation' bearing the date 19 July 2013; (iv) an incomplete 'Australian Taxation Office - Standard Choice Form' bearing the date 19 July 2013; (v) two incomplete 'Australian Government - Request to transfer whole of balance of superannuation benefits between funds' forms bearing the date 19 July 2013; (vi) two incomplete NSG forms entitled 'Authority to disclose and/or receive information' bearing the date 19 July 2013; (vii) an incomplete Macquarie Super Accumulator Application Form bearing the date 19 July 2013; and (viii) an incomplete Macquarie Life - New Business Application bearing the date 19 July 2013. After the Person A meeting 331. Following the Person A meeting, Trinh: (a) completed or caused to be completed the documents listed in paragraphs 330(b)(ii)-(viii); (b) arranged for another NSG Representative, Adrian Chenh, to sign the Macquarie Super Accumulator Application Form bearing the date 19 July 2013 purportedly as a witness of Person A's signature; and (c) copied or arranged to have copied Person A's signature on another part of the Macquarie Life - New Business Application form bearing the dated 19 July 2013, which had already been signed by Person A. 332. Following the Person A meeting, on or about 19 July 2013, Trinh obtained or caused to be obtained a quote from Macquarie for life insurance. 333. Following the Person A meeting, Trinh prepared or caused to be prepared an NSG document entitled "Statement of Advice" for Person A bearing the date 19 July 2013 (Person A SOA), which was the same date as the Person A meeting and the incomplete forms signed by Person A and listed at paragraph 330(b)(ii)-(viii) above. 334. Following the Person A meeting, Trinh submitted or caused to be submitted on behalf of Person A the product application forms referred to at paragraphs 330(b)(ii)-(viii) above in order to implement the Person A superannuation advice and the Person A insurance advice, save that, despite the fact that Trinh orally informed Person A at the Person A meeting that he would identify and consolidate all her superannuation funds, Trinh did not include Person A's AMP funds in the rollover to Macquarie. 335. On or around 5 August 2013, the insurance lodgement for Person A was rejected by NSG's Verifications Department on the grounds that the Personal Statement needed to be corrected. The lodgement was later accepted after the issue was resolved. 336. On about 12 August 2013, a policy in Person A's name was taken out with Macquarie for life insurance and disability insurance in the amount of $300,000 at a premium of $123.72 per month plus a monthly fee of $7.64. 337. Further, on about 26 August 2013, a superannuation account in Person A's name was opened with Macquarie and Person A's superannuation funds held with OnePath in the amount of $26,957.18 and superannuation funds held with Mercer in the amount of $40,189.51 were rolled over to Macquarie. 338. Person A did not receive a copy of the Person A SOA, or any other written statement of advice, from Trinh or NSG, prior to agreeing to implement the Person A superannuation advice and the Person A insurance advice, or at all. 339. At no time was Person A's superannuation held with her two AMP funds rolled into the Macquarie fund. 340. Person A was not advised by Trinh that she held superannuation with two AMP funds, either prior to agreeing to implement the Person A superannuation advice, or at all. 341. Person A was not advised by Trinh that she already held life insurance and disability insurance through her existing superannuation funds, either prior to agreeing to implement the Person A insurance advice, or at all. Consequences of advice by NSG 342. As a result of Trinh's advice, on around 3 September 2012, Person A paid an "adviser fee" of $2,348 to NSG out of her Macquarie fund, as well as several monthly adviser fees of $30. 343. Further, as a result of Trinh's advice, in the period between around August 2013 and around August 2015, Person A paid $3,093 in insurance premiums out of her Macquarie fund. Admissions of contraventions Contraventions of ss 961B and 961G by Trinh 344. By reason of the matters set out at paragraphs 322 to 343, NSG admits Trinh did not act in the best interests of Person A in relation to his advice to Person A and has thereby breached s 961B(1) of the Act. 345. Further, NSG admits the advice Trinh provided to Person A was not appropriate to Person A, in breach of s 961G of the Act, by reason of the following matters: (a) prior to the implementation of Trinh's advice, Person A had: (i) life insurance and disability insurance of $23,198.19 within her existing OnePath superannuation; (ii) life insurance and disability insurance of $143,031.95 at a cost of $300 per year within her existing Mercer superannuation; (b) the insurance taken out with Macquarie was life and disability insurance of $300,000 at a cost of $1,484.64 per year; (c) by paying the insurance premiums out of her superannuation, Person A's superannuation was being depleted; and (d) Trinh did not identify and roll over Person A's superannuation held with two AMP funds. Contraventions of s 961K(2) by NSG 346. NSG admits that NSG contravened s 961K(2) of the Act by reason that Trinh, acting as its representative other than an authorised representative, contravened s 961B(1) and s 961G of the Act in providing advice to Person A. Contraventions of s 961L by NSG 347. In providing advice to Person A, Trinh followed the new client advice process set out in paragraphs 22 to 28 above. 348. Further, Trinh: (a) at all material times during his engagement as an NSG Representative was subject to NSG's training systems and practices as set out in paragraphs 29 to 50 above; and (b) provided advice to Person A while still being a trainee adviser and not yet an authorised representative of NSG within the meaning of the Act. 349. NSG admits that, by reason of the matters set out in paragraphs 22-122 and 347-348 above, NSG contravened s 961L of the Act by failing to take reasonable steps to ensure that Trinh complied with ss 961B(1) and 961G of the Act in providing advice to Person A. (h) Contraventions relating to advice by Ozak to NSG client Person B Relevant conduct by Ozak with respect to Person B Person B Meeting 350. On 20 August 2015, Ozak, as an NSG Representative, attended the home of Person B for a meeting to provide Person B with personal financial advice as a retail client (the Person B meeting). 351. At the Person B meeting, Person B told Ozak that: (a) he was on a salary of approximately $47,000 per year before tax; (b) he had a car loan of $15,000; (c) he was living in the home owned by his mother; (d) he was financially supporting his mother; and (e) he did not have any savings. 352. At the time of the Person B meeting, Person B, to his knowledge, already had life insurance and disability insurance through his Australian Super superannuation fund. 353. At the Person B meeting, Person B provided Ozak with a copy of his Australian Super superannuation statement as at 30 June 2015, which referred to Person B having life insurance and disability insurance of $55,000 at a cost of $100 per year. 354. At the Person B meeting, Ozak orally advised Person B to take out income protection insurance (Person B insurance advice). 355. In respect of the Person B insurance advice, Ozak: (a) orally advised Person B that the income protection insurance would be paid out of Person B's superannuation, that it would only cost $100 per year and that Person B would not notice the cost; (b) did not discuss any particular income protection insurance providers; (c) did not discuss whether there was an option of taking out income protection insurance with Person B's existing Australian Super superannuation fund; (d) did not discuss with Person B, or provide any oral advice to Person B, about the appropriate level of insurance cover; (e) did not provide any information about the fees and costs of the recommended income protection insurance; (f) did not provide any comparisons between products offered by different insurance providers; and (g) did not give Person B copies of any quotes from insurance providers. 356. At the Person B meeting, Ozak told Person B that he was not paid a commission for his services and that "his boss pays him", but did not otherwise provide Person B with any information about the commission and fees payable to Ozak, or NSG in relation to his advice and recommendations. 357. After hearing Ozak's advice and recommendations, during the Person B meeting, Person B: (a) agreed to follow Ozak's recommendation to take out income protection insurance; and (b) at Ozak's request, signed a number of incomplete forms and documents, which were then retained by Ozak, being: (i) an incomplete document entitled Client Fact Finder bearing the date 20 August 2015 (Person B Fact Finder); (ii) an incomplete document entitled 'Personal statement - Insurance through Superannuation' bearing the date 20 August 2015; (iii) an incomplete TAL 'Accelerated Protection Application Form' bearing the dated 20 August 2015; and (iv) an incomplete NSG document entitled 'Authority to Disclose and/or Receive Information' bearing the date 20 August 2015. After the Person B meeting 358. Following the Person B meeting, Ozak, completed or caused to be completed the documents set out at paragraphs 357(b)(i)-(iv). 359. Following the Person B meeting, on or about 24 August 2014, Ozak obtained or caused to be obtained quotes for life insurance, disability insurance and income protection insurance from Macquarie and AIA. 360. Following the Person B meeting, Ozak submitted or caused to be submitted on behalf of Person B the TAL 'Accelerated Protection Application Form' bearing the date 20 August 2015 in order to take out life insurance, and disability insurance and income protection insurance in Person B's name through TAL, despite the fact that Person B already had life insurance and disability insurance through his Australian Super superannuation fund. 361. On about 4 September 2015, unbeknownst to Person B, a sum of $3,863 was transferred from Person B's Australian Super superannuation fund to TAL. 362. On about 8 September 2015, a policy in Person B's name was taken out with TAL for life insurance and disability insurance in the amount of $300,000, and for income protection insurance, at a cost of $3,863 per year, but the policy did not include income protection insurance. 363. Person B did not receive any written statement of advice from Ozak or NSG, either prior to agreeing to implement the Person B insurance advice, or at all. 364. Person B was not advised by Ozak, prior to Ozak taking out life insurance and disability insurance with TAL in Person B's name, that he proposed to take out that insurance for Person B. Consequences of advice 365. Later in around September 2015, following a request by Person B, TAL cancelled all insurance policies taken out in his name by NSG. 366. Further, in around December 2015, following a request by Person B, TAL repaid the sum of $3,863 to Person B. 367. During the period when Person B was covered by insurance policies taken out in his name with TAL, Person B had life insurance and disability insurance through each of both Australian Super and TAL, but did not have any income protection insurance. Admissions of contraventions Contraventions of ss 961B(1) and 961G by Ozak 368. By reason of the matters set out at paragraphs 350 to 367, Ozak did not act in the best interests of Person B in relation to his advice to Person B and has thereby breached s 961B(1) of the Act. 369. Further, NSG admits that the insurance advice Ozak implemented for Person B was not appropriate to Person B, in breach of s 961G of the Act, by reason that: (a) Person B did not wish to take out additional life insurance or disability insurance and only wanted income protection insurance but Ozak nevertheless arranged for a new life and disability insurance policy to be taken out in Person B's name with TAL.; and (b) Person B wished to take out income protection insurance but Ozak did not arrange for an income protection insurance policy to be taken out in Person B's name. Contraventions of s 961K(2) by NSG 370. NSG admits that NSG contravened s 961K(2) of the Act by reason that Ozak, acting as its representative other than an authorised representative, contravened ss 961B(1) and 961G of the Act in providing advice to Person B. Contraventions of s 961L by NSG 371. In providing advice to Person B, Ozak followed the new client advice process set out in paragraphs 22 to 28 above. 372. Further, at all material times during his engagement as an NSG Representative, Ozak was subject to NSG's training systems and practices as set out in paragraphs 29 to 50 above. 373. NSG admits that, by reason of the matters set out in paragraphs 22-122 and 350-371 above, NSG contravened s 961L of the Act by failing to take reasonable steps to ensure that Ozak complied with ss 961B(1) and 961G of the Act in providing advice to Person B.