Getting on ASIC’s bad side: could it happen to you? 

Alex Burke,  Senior Writer,  No More Practice Education

When ASIC banned adviser James Cribb in 2018, the regulator said he'd failed to take clients' best interests into account while providing advice on SMSFs.

ASIC said Cribb had "prioritised his own interests over those of his clients by providing advice that was likely to benefit other entities related to him, including an SMSF administration business for which he was the sole director and a shareholder." As a result, he was banned for four years and his AFSL was suspended for 10 weeks.

Controversially, Cribb was invited to speak at the FPA Congress in Melbourne recently, where he was interviewed by Integrity Compliance managing director Rhett Das. Das noted the criticism the FPA had faced leading up to Cribb's appearance, and asked him what he thought of it.

"I’ve always learned from my mistakes," Cribb explained, "so if I can impart something good, I’ve done my job. I’ve been involved in financial services for over 20 years, and we always read case studies and say, ‘That’s never going to be me.’ I thought everything was great, but if you look under the hood of any business, any adviser, you can see mistakes. The reason why I’m here is to let all of you learn from my mistakes."

Describing the lead-up to his banning, Cribb said: "I was an SMSF specialist adviser through the association. I was well-known in the SMSF space. But then I was picked up – it wasn’t a client complaint but rather in regard to the SMSF surveillance activity going on."

"I was doing SMSFs all day long," he continued, "and I very rarely did anything retail. Clients usually came to us with an asset they’d already picked out, whether it was a property or a property trust, or whatever it might have been."

When Das asked where he went wrong during that process, Cribb said it came down to documentation.

“To me," he said, "it was a grey area. We had a lot of clients go to one of my accounting firms with an application to set up an SMSF. In saying that, we wanted to make sure those clients were aware of what they were getting into.

“So what went wrong? A lot of documentation. It’s about demonstrating your process to the regulator. So, record-keeping – there were records, but did they demonstrate the truth of what happened? There were a lot of issues around that. Where did we go wrong? Well, you don’t know what you don’t know."

One notable aspect of Cribb’s case was the number of lower-balance SMSF clients – those with an account balance of less than $200,000. Das wondered what Cribb would have done differently if he had the opportunity to do it all again.

“We definitely wouldn’t look at those clients,” Cribb said. “I’m not an adviser now. The AFSL still runs and those guys were doing a great job with that license. It’s an ever-evolving decision matrix, so we wouldn’t set those clients.”

Further, Cribb said the onus is on advisers to make sure they’re not basing everything they do on “what the compliance department says.”

“Should you instead be obtaining a third party to look at your advice files?” he wondered. “I looked at it and had a false sense of security, but I should have engaged someone to do the compliance of the compliance, basically.”

Ultimately, Cribb reflected on the potential atmosphere in the room and said: “I was and still am committed to the industry.”

“I suppose for those knockers out there,” he added, “the haters are gonna hate. Realistically I’ve let myself down I’ve let all my staff down, I’ve let my clients down to a certain degree. I’ve let every one of you down, but for those knockers, the industry’s good. I made a mistake and got through this. I was committed to rectifying the mistakes.”

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I was sceptical when I first saw this session appear on the program, but I attended anyway. I would say the interviewer and Mr Das set the scene beautifully and conducted what I thought was a great interview. Hats off the Mr Cribb for having the guts to appear in front of his peers and instead of being relatively negative about this session I left the session feeling as though I had learned something from the mistakes of another fellow human being who was willing to share his experiences. Well done Mr Cribb ! It is very easy to judge someone , it would be truly a blessed person who thought he was perfect in every way

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