ick has represented this company at a seminar on financial investment,

I. ISSUE
Rick means the authorized representative and broker of a finance company named
Wealth Pty Ltd. Rick has represented this company at a seminar on financial
investment, he is also the person who has provided financial advice and investment
advice to Morgan. The first legal issue here is whether Wealth Pty Ltd. is a
financial service provider or not?
Wealth Pty Ltd. contracted to provide financial services to Morgan. The issue here
is whether Wealth has a responsibility to care for Morgan or not?
Rick examined Ependysi Ltd's profit reports and results. and affirms that this
company will bring profit up to 30% in this financial year. Rick advised Morgan to
invest $100,000 in Ependysi Ltd. instead of $50,000 because he thinks $50,000 is
not enough to provide a substantial return on investment. Ependysi paid
commissions to its licensees and advisors to attract investors instead of disclosing
real company information. The legal issue here is whether Rick is considered
cheating?
Wealth Pty Ltd. recognizes that they have been declared wrongly or cause
misunderstanding with customers that they have appropriate systems and
procedures to give the appropriate advice. Moreover, misjudgements about
investment in Vanguard that Representative of the company have been wrong. Is
the legal problems raised as Wealthy that violate the regulations on deception,
causing misunderstanding to customers?
As a financial company, Wealthy Pty Ltd. have never trained representatives, they
are not qualified to provide financial services. The dispute resolution department is
not organized at Wealth Pty Ltd. The Company has not maintained the
organizational capacity or resources necessary to provide the licensed financial
services. The legal issue that arises in this situation is whether Wealth Pty Ltd.
breach the obligations of a licensed financial service provider?
II. RULING
Item 12BC(1) Australian Securities and Investments Commission Act 2001
provides for the conditions for a subject to become a consumer when participating
in financial service relations.

Section 911A of the 2001 Group law prescribes that any person, when conducting
business activities, that is providing financial services, must obtain financial
service licenses.
Section 766A of the 2001 Law on Group, on subjects considered to be financial
service providers. Accordingly, the supplier is considered as the financial service
provider, unless the financial advice is made by a secretary or the cashier.1
Consultancy on financial products prescribed in Section 766B of this Law means a
recommendation or a statement of view or a report that affects a decision on
financial products of an individual or several persons.
Section 916A(1) Law on EVN stipulates that the representative of the person who
is granted the financial service license may represent the person who is granted the
license to provide a specific financial service.
Section 12ED(1) Australian Securities and Investments Commission Act 2001
requires that a party providing financial services to a client under a financial
service contract must ensure that the contract is performed with appropriate care
and skill.
Item 12DB(1) Australian Securities and Investments Commission Act 2001
provides that acts of presenting wrongly or causing misunderstanding about
standards, quality, value or specific level of services provided by financial service
providers are prohibited. In addition, any misrepresentation that causes
misunderstanding of the testimony of a person, as well as creating a false or
deceptive claim about sponsorship, approval, performance qualities, uses, or
advantages of services shall be also regarded as a fraudulent act.
The result of the case Ali v Hartley Poynton Ltd. shows that predicting the
possibility of a high return of an investment causing the client to lose is considered
a deceitful and misleading practice for the client.
Under Section 961B of the 2001 Law on Group, client's best interests must be
served, and respected.
The financial service providers licensed for financial services must fulfill the
obligations specified in Section 912A of the 2001 Law on Group, including the
following obligations:
1Corporation Act 2001, section 916A(3).

- Ensuring that all necessary actions for financial services are provided in an
effective, truthful and fair manner;
- Maintaining the capability to provide the licensed financial services;
- Ensuring that the representatives are trained fully and qualified;
- There must be a dispute settlement system;
Section 912D(1D) of the 2001 Group Law stipulating that the person who is
granted the financial service license must notify the ASIC of any violation of
obligations under Section 912A within 10 working days after being informed of
the violation.
Section 915C(1)(a) of the Law on Group 2001 considers ASIC's competent
authority to suspend or cancel financial service licenses of any financial service
providers that fail to fulfill obligations specified in Section 912A after the hearing.
III. APPLICATION
Item 12BC2 shows that the model is a consumer when participating in the financial
service contract with the Wealth by Morgan, has used the inherited money and is
invested to gain more profits as well as to detoxify the gambling suspect. Although
the contract value is $150,000 (beyond the standard for the value of goods/services
in the Consumer Law 2010), the investment is used for personal purposes of
Morgan is money saving and the gambling center. With this in mind, Morgan has
right to sue Wealth if they violate the provisions of the ASIC Act 2001.
According to Item 911A3, as a financial company, Wealth is required to have a
financial services license provided by the Australian government to be able to do
business legally.
Pursuant to Section 916A(1) 4, as a representative of Wealth, Rick will, on behalf
of this company, provide a financial service to the customer who has signed the
contract with Wealth.
It is necessary to apply Section 766A5, Wealth Pty Ltd (Wealth) to hold investment
consultation seminars, and then Wealth, the Wealth is also required to sign
contracts to provide financial consultation services for Morgan with Rick
2Australian Securities and Investments Commission Act 2001, Section 12BC(1).
3Corporation Act 2001, 911A.
4Corporation Act 2001, section 916A(1).
5Corporation Act 2001, section 766A.