Wealthsure and Wealthsure FS are authorised under their Australian financial services (AFS) licence to offer financial advice. Wealthsure is authorised under its Australian credit licence to engage in credit activity.

Mr Pawski, of Sorrento, Western Australia, was the CEO of Wealthsure and Wealthsure FS and is currently the managing director of Wealthsure.

Wealthsure and Wealthsure FS

The EUs follow an ASIC investigation that started in December 2011. The investigation reviewed Wealthsure’s compliance systems and identified recurring compliance deficiencies, despite previous regulatory intervention in 2006.

ASIC is concerned that Wealthsure’s commitment to compliance is inadequate. This has resulted in a business culture that has not given sufficient priority to risk management, with consequent detrimental outcomes for consumers.

Wealthsure has demonstrated a failure to properly identify, assess and control compliance risks. In 2011, ASIC expressed concerns about licensees operating a ‘lite touch’ business model (refer 11-44MR). 

ASIC is concerned that Wealthsure’s ‘lite touch’ approach to compliance has resulted in:

• a failure to regularly or consistently review its representatives’ financial product advice
• a failure to subject its representatives, with a higher risk of compliance breaches, given their compliance history, associations or business model, to more regular random audits
• a failure to conduct robust investigations into non-compliant representative conduct or give appropriate consideration to breaches
• a failure to systematically ensure appropriate sanctions or other consequences for non-compliant representative conduct
• a failure to provide its representatives with robust documented policies and procedures, and
• a failure to employ adequate processes for identifying and addressing the competence and training needs of its representatives.

The EU requires Wealthsure and Wealthsure FS to complete a program to address its failure to foster and maintain a proper commitment to its compliance obligations. The program will be reviewed by an independent expert, who will report to ASIC regularly until 2018.

Additionally, the EU requires Wealthsure and Wealthsure FS to restructure their board. Wealthsure must replace its managing director, Mr Pawski, and both Wealthsure and Wealthsure FS must maintain a majority of independent non-executive members on their boards.

If Wealthsure or Wealthsure FS breach terms specified in the EU, they must cease providing financial services and credit activities until ASIC is satisfied that they should be allowed to continue.

Mr Darren Pawski

ASIC’s investigation found that Mr Pawski was instrumental in Wealthsure’s multiple compliance failures. Under the EU, Mr Pawski must permanently refrain from:

• exercising or attempting to exercise any influence over Wealthsure or Wealthsure FS’s shareholders or new senior executives
• providing financial services
• having any involvement or exercising any influence in key decisions of an AFS licensee
• taking part in the management of any AFS licensee
• having any involvement or exercising any influence in any key decision-making by Wealthsure, as it relates to credit activities, and
• taking part in the management of Wealthsure or Wealthsure FS, as it relates to credit activities.

ASIC notes Wealthsure, Wealthsure FS and Mr Pawski have fully cooperated and worked constructively with ASIC during its investigation. They have been proactive in their dealings with ASIC in proposing and implementing solutions to address our concerns.

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Appearing in the Sydney District Court, Mr Veitch, formerly of Minto, New South Wales, pleaded guilty to 22 counts of using a false instrument.

Mr Veitch was an authorised representative of WealthSure Pty Ltd from 14 December 2005 to 23 February 2010. During this time, Mr Veitch admitted to:

21 counts of using false withdrawal requests to cause the fraudulent transfer of approximately $500,000 from seven clients’ accounts without their knowledge or authority for his own purposes, and
one count of providing a client with a false portfolio statement causing the client to believe that $300,000 was still in their account when in fact it was not.

These charges follow ASIC’s investigation into Mr Veitch’s former role as a financial adviser.

The matter will return to the Sydney District Court on 8 November 2013, with conditional bail to continue.

The Commonwealth Director of Public Prosecutions is prosecuting this matter.

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