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Property investment company Opes Partners has been censured for failing to comply with obligations under its financial advice provider licence.
Opes offers clients a wealth plan, then helps them find properties to invest in, as well as helping to arrange their mortgage and manage the property.
It also produces the Property Academy podcast.
But Financial Markets Authority director for response and enforcement Louise Unger said there were short-comings in its record-keeping, how it ensured client understanding of advice, management of conflicts of interest and oversight of advisers.
"The way Opes' client documents are completed, how they are stored, and the level of detail recorded is not consistent, and records weren't efficiently accessible, to the extent that Opes was in breach of the requirements of standard condition one of its FAP licence. In addition, this breach made it difficult for FMA to verify whether other regulatory obligations were being met.
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"There were additional reasonable steps that Opes could have taken to ensure its clients who did not progress to purchase a property with Opes understood the risks and limitations of the advice provided. Clients who did not proceed through the full advice process with Opes, where they would have received further risk disclosures, may not have been made fully aware of the potential downsides or the implications of acting on limited advice."
She said because the business offered property sales, investment planning, mortgage advice, accounting and property management, there was a risk of conflicts of interest.
"Making adequate policies and procedures in this area, and the implementation of them, critical to appropriately managing this risk. The FMA found that Opes did not have adequate policies or processes in place and could not be confident that all conflicts had been identified, disclosed, and managed.
"Opes acknowledged that its regulatory compliance, policies, procedures and staff adherence to policies had not kept pace with its rapid growth and were not fit-for-purpose for the business. It has acknowledged the FMA's view that there has been a gap between Opes' compliance with its FAP obligations and where it actually needs to be.
"While no actual client harm was identified by the FMA's review, we consider that these contraventions have the potential to increase the risk of detriment to customer outcomes. Censuring and naming Opes is important to ensure the transparency of FMA decision making; it informs the public and previous clients, prevents and reduces the opportunity for consumer detriment, and helps to maximise the deterrent effect on the industry.
Unger said Opes had fully co-operated with the FMA and had taken significant steps to address the concerns and provide a voluntary remediation plan for further improvements.
Opes economist Ed McKnight said the business supported the censure and would take the necessary steps to address the issues identified.
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