The breaches of financial services laws arose from a business conducted by Wealth and Risk Management Pty Ltd, Yes FP Pty Ltd, now in liquidation, and Jeca Holdings Pty Ltd, also in liquidation, which offered and gave cash payments to financially vulnerable clients in connection with the provision of financial advice.

The Court also found that a former director of the companies, Joshua Fuoco, was knowingly concerned in the breaches and ordered him to pay a penalty of $650,000.

“Mr Fuoco agreed to declarations and orders being made against him following a settlement with ASIC. Mr Fuoco also agreed to an order restraining him from providing financial services for a period of 10 years and to pay $100,000 towards ASIC’s costs of its investigation and conducting the court proceeding,” the corporate regulator said.

ASIC stated that the business advertised 'fast cash' to consumers with poor credit histories seeking loans and required consumers to receive and implement financial advice that recommended switching their superannuation and taking out 'high end' insurance.

The business charged advice fees that were paid out of consumers’ superannuation funds and received upfront and trailing insurance commissions and used the upfront insurance commission generated by the financial advice to provide a 'cash rebate' to clients.

“This process often resulted in a substantial erosion of the client's superannuation balances,” said ASIC.

The Court found that in conducting this business model Wealth and Risk Management Pty Ltd, which held an Australian financial services licence (AFSL), breached its licensee obligations, including obligations requiring that it take reasonable steps to ensure that its authorised representatives act in clients’ best interests and provide advice that is appropriate, and do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly.

It was found that Yes FS carried on a financial services business without holding an AFSL, made false and misleading representations and engaged in misleading and deceptive conduct. All three companies engaged in unconscionable conduct.

In addition to ordering that the companies pay pecuniary penalties, the Federal Court ordered that they be restrained from carrying on a financial services business for 18 years. It also ordered that they be permanently restrained from making any offers of cash payments in connection with the provision of financial advice, or entering into or advertising cash rebate agreements or other like arrangements.

ASIC deputy chair Peter Kell said the breaches were the result of very poor conduct.

"This is a significant outcome in a case where a financial services business has deliberately flouted the law and targeted financially vulnerable consumers.”