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The Australian Financial Security Authority (AFSA) is warning business owners to ensure they’re speaking to trustworthy sources, as the economic turbulence in the fallout of the COVID pandemic pushes more small businesses to seek financial advice.
A recent release from the body outlined the red flags that might indicate a financial adviser is providing misleading or illegal advice, which could have serious consequences for their clients, including convictions.
AFSA identified the following eight tell-tale signs of an untrustworthy adviser:
- Creating an unnecessary sense of urgency to hinder critical thinking and sound decision making.
- Funnelling all communications through them and trying to cut out others. They may also list their email address for your business as well as creditors.
- Misusing the Personal Property Securities Register (PPSR) and making false registrations. The PPSR can be checked at any time on AFSA’s website.
- Recording a high number of “friendly” creditors as unsecured debts.
- Downplaying the risks of any activity and overstating the returns.
- Using unnecessary jargon and failing to explain their proposals fully and clearly.
- Implying that they are well-connected or work with reputable people but do not provide actual references to contact.
- A lack of supporting documents or evidence for activities undertaken or proposals for future work.
They advise any business that feels they may be working with an unscrupulous adviser to report them through AFSA’s online tip-off service.
On their part, the body is working to use its legislated powers to disrupt the activity of untrustworthy advisers by conducting its own investigations, putting pressure on practitioners engaging with bad actors, and engaging with other regulators and law enforcement agencies to identify suspicious activity.
Small-business owners who have questions about their finances can access free, trustworthy information on AFSA’s website, through the National Debt Helpline and via ASIC’s Moneysmart website.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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