According to an ASIC statement issued in November 2018, Financial Circle offered personal loans to consumers of up to $5,000 that could only be obtained if the consumer agreed to receive and implement financial advice. The advice typically recommended purchasing personal insurance products and switching superannuation providers.

When consumers implemented the advice, significant advice fees were paid to Financial Circle directly from the consumer’s superannuation. Financial Circle also received ongoing commission payments from the insurers, ASIC stated. This process often resulted in a substantial erosion — in many cases up to 30 per cent — of the client’s superannuation balances, according to the corporate regulator.

The Federal Court found that Financial Circle had made false and misleading representations and engaged in misleading and deceptive conduct.

It also found that it had breached its licensee obligations under its Australian financial services licence.

Following the Federal Court decision, ASIC permanently banned former responsible manager Anthony David Wyn, who was a sole director of the firm, from providing financial services.

The corporate regulator also made banning orders that would have permanently prohibited him from engaging in any credit activities. Mr Wyn then sought a review of the credit banning order.

The Federal Court was highly critical of Financial Circle’s business operations and imposed sanctions. Mr Wyn was the sole director of Financial Circle.

In the appeal of the banning decision, the applicant, Mr Wyn, contended that he thought Financial Circle was acting as an intermediary between peer lenders and borrowers for applicants, and that he honestly believed that the licence they purchased was adequate for that.

He also stated that many of the relevant issues had not been properly examined by either ASIC or the court because Financial Circle did not have the resources to contest the case against it.

He also claimed that the circumstances set out in ASIC’s guidance in Regulatory Guide RG 218, dealing with when a permanent ban is appropriate, are much more serious than the conduct of Financial Circle and the applicant — as its sole director — engaged in.

In his decision, deputy president Frank O’Loughlin QC concluded that Financial Circle’s business activities constituted “egregious breaches of minimum standards required by both the NCCP Act and Corporations Act” and exploited vulnerable consumers.

He noted, however, that the applicant presented “as a rather innocent if not naïve person”.

“He was neither the mastermind nor architect of the Financial Circle business model. It is possible that his nature led him to assume the role acting as the face of Financial Circle’s business,” he stated.

The tribunal formed the view that in those circumstances, and based on the applicant’s previous, apparently unblemished, employment history, he should be permitted to seek and obtain employment with an APRA-authorised approved deposit-taking institution assisting borrowers obtain loans, independently of any financial services.

“The NCCP Act contemplates a graduated scale of types of banning order that can be tailored to suit particular circumstances,” the deputy president stated.

“Not embracing what is clearly contemplated by the legislature in the exercise of discretionary powers, by not addressing the particular circumstances of the case, is inappropriate. In the Tribunal’s view, the protective objectives of the scheme of s 80 banning orders is achieved, and importantly not frustrated, by the exception allowed in this instance.”