Federal Court of Australia

Australian Securities and Investments Commission v R M Capital Pty Ltd (No 2) [2025] FCA 1634

ORDERS

THE COURT NOTES THAT:

A.    Pursuant to s 91 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), the second defendant (SMSF Club) agrees, upon the making of an order by the plaintiff (ASIC) for the same, to pay ASIC $270,000 being part of:

(a)    the expenses of the investigation into SMSF Club made by ASIC under Division 1 of the ASIC Act that led to ASIC's commencement of this proceeding; and

(b)    the cost to ASIC of making the investigation.

THE COURT DECLARES THAT:

RM Capital

1.    During the period August 2013 to August 2016 (Relevant Period), the first defendant (RM Capital) contravened s 963F of the Corporations Act 2001 (Cth) by failing to take reasonable steps to ensure that its authorised representative, SMSF Club, did not accept conflicted remuneration within the meaning of s 963A of the Corporations Act.

SMSF Club

2.    SMSF Club contravened s 963G(1) of the Corporations Act by accepting, from Positive RealEstate Pty Ltd, conflicted remuneration within the meaning of s 963A of the Corporations Act in the form of a monetary benefit, on each of the dates and in each of the corresponding amounts set out in the Schedule to these orders.

THE COURT ORDERS THAT:

RM Capital

3.    Pursuant to s 1317G(1E) of the Corporations Act (as in force during the Relevant Period), RM Capital must pay the Commonwealth a pecuniary penalty totalling $575,000 in respect of its contravention of s 963F of the Corporations Act.

4.    Pursuant to s 1101B(1)(a)(i) of the Corporations Act, within six months of the date of these orders, RM Capital must:

(a)    have in place appropriate systems, policies and procedures to ensure that RM Capital's representatives comply with s 963G(1) of the Corporations Act; and

(b)    provide ASIC with a written report of an independent expert stating whether RM Capital has complied with the requirements in paragraph (a) above.

(c)    The identity of the independent expert for the purposes of paragraph (b) above and the terms of his or her retainer are to be agreed between ASIC and RM Capital or, failing agreement, determined by the Court.

(d)    The costs of the independent expert are to be met by RM Capital.

5.    RM Capital must pay ASIC's costs of and incidental to the proceeding as against RM Capital as agreed or assessed.

SMSF Club

6.    Pursuant to s 1317G(1E) of the Corporations Act (as in force during the Relevant Period), SMSF Club must pay the Commonwealth a pecuniary penalty in respect of the 52 occasions in the Schedule on which it is declared above to have contravened s 963G(1) of the Corporations Act, in a total sum (for all 52 occasions) of $350,000.

7.    Pursuant to s 1101B(1)(a)(i) of the Corporations Act, within six months of the date of these orders, SMSF Club must:

(a)    have in place appropriate systems, policies and procedures to ensure that SMSF Club complies with s 963G(1) of the Corporations Act; and

(b)    provide ASIC with a written report of an independent expert stating whether SMSF Club has complied with the requirements in paragraph (a) above.

(c)    The identity of the independent expert for the purposes of paragraph (b) above and the terms of his or her retainer are to be agreed between ASIC and SMSF Club or, failing agreement, determined by the Court.

(d)    The costs of the independent expert are to be met by SMSF Club.

8.    There is no order as to the costs of and incidental to the proceeding as between ASIC and SMSF Club.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Schedule OF SMSF CLUB's CONTRAVENING CONDUCT

Table of Contents

REASONS FOR JUDGMENT

JACKSON J:

1    In Australian Securities and Investments Commission v R M Capital Pty Ltd [2024] FCA 151 (First Judgment) I determined that the first defendant, RM Capital Pty Ltd, had contravened s 963F of the Corporations Act 2001 (Cth), by failing to take reasonable steps to ensure that its authorised representative, the second defendant The SMSF Club Pty Ltd, did not accept conflicted remuneration.

2    These reasons determine the balance of the questions in the proceeding. Those questions are:

(a)    whether SMSF Club contravened s 963G(1) of the Corporations Act by accepting conflicted remuneration on certain specified occasions;

(b)    the relief to be granted against RM Capital as a result of the findings in the First Judgment; and

(c)    the relief to be granted against SMSF Club if it is found to have contravened s 963G(1).

3    There is no issue between the parties as to the first and third of these, as the plaintiff (ASIC) and SMSF Club have reached agreement. They have filed a statement of agreed facts and a joint submission and provided a minute of orders. A hearing of the proceeding as between the two of them has also been held. But for procedural reasons explained fully in the First Judgment, the Court has not determined the proceeding as between ASIC and SMSF Club because it was appropriate for this to be done at the same time as determining the remaining issues between ASIC and RM Capital, who have not reached agreement as to the relief to be granted.

4    I will proceed to address each of the above questions in turn.

SMSF CLUB'S CONTRAVENTIONS OF S 963G OF THE CORPORATIONS ACT

5    This judgment assumes familiarity with the First Judgment and should be read in conjunction with it. But it is convenient to recap briefly, in the course of making findings about the first of the three questions.

6    What follows is based on the First Judgment together with the statement of agreed facts signed by SMSF Club and ASIC on 21 May 2021 (SMSF Club SOAF). The SMSF Club SOAF may not have the status of evidence by force of s 191 of the Evidence Act 1995 (Cth), because it is not signed by RM Capital as one of the parties to the proceeding. But for the same reasons as expressed in the First Judgment at [87], I will treat the SMSF Club SOAF as uncontradicted evidence admitted by the consent of ASIC and SMSF Club as to the issues between them, and I will give it substantial evidentiary weight. In addition, to the extent that it contains admissions by SMSF Club, those statements are admissible on that basis, and uncontradicted.

7    SMSF Club carried on business as a provider of advice and assistance to persons wishing to set up their own self-managed superannuation funds (SMSFs). During the relevant period of November 2014 to July 2016, it did so under the aegis of an Australian Financial Services Licence (AFSL) held by RM Capital. SMSF Club was thus what is known in the jargon of the Corporations Act as an authorised representative of RM Capital.

8    During that period, and in so far as relevant here, SMSF Club assisted some 52 couples or individuals (Clients) to set up SMSFs and to transfer investments into them or acquire investments through them. Each of those Clients were referred to SMSF Club by a company called Positive RealEstate Pty Ltd (PRE). PRE carried on business providing 'property education, property mentoring and property advice' to investors and potential investors. Essentially, the Clients used the SMSFs which SMSF Club had advised them to set up to purchase real property through PRE, and SMSF Club assisted them in doing so.

9    When that happened, PRE would pay a referral fee to SMSF Club. The referral fees ranged between $212.50 and $5,142.50 (plus GST) per Client. This was done under an agreement between PRE and SMSF Club under which PRE agreed to pay SMSF Club a fee of $5,000 (plus GST), or such other amount as may be negotiated between the parties, each time PRE referred a person to SMSF Club for the establishment of a 'bare trust' within an SMSF to purchase property through PRE.

10    The referral agreement was unwritten between 2013 and September 2015, and in writing until it was terminated in about August 2016. The precise date of the commencement of the agreement is unknown; findings in the First Judgment placed it at around August 2013 but the SMSF Club SOAF (which was not in evidence for the purposes of the First Judgment) dates it from February 2013. But nothing turns on the commencement date and I do not need to make any finding other than to say that it was in force from August 2013 if not earlier.

11    It is a fact agreed in the SMSF Club SOAF that throughout the period of the referral agreement, SMSF Club provided recommendations or statements of opinion that were, or could reasonably be regarded as, intended to influence its Clients in making a decision in relation to a financial product. In other words, SMSF Club gave Clients 'financial product advice' within the meaning of s 766B of the Corporations Act.

12    The SMSF Club SOAF stipulates, and I find, that SMSF Club provided this financial product advice on various occasions that are described in the First Judgment at [129]-[133]. The description need not be repeated here, save to note that it included presentations given by the sole director of SMSF Club, Justin Beeton, and other advisers employed by SMSF Club, at seminars run by PRE. At those seminars the advisers would talk about the advantages, disadvantages and risks of buying property through SMSFs. With few if any exceptions, this advice was given to 'retail clients' within the meaning of s 761G of the Corporations Act.

13    The SMSF Club SOAF lists the 52 Clients who, it says, received advice of the nature set out above as retail clients, and who purchased property through PRE by way of a bare trustee for each Client. It lists for each Client a date on which SMSF Club accepted a referral fee in respect of the Client, the amount of the fee, the property purchased by the Client's SMSF and the date on which that SMSF was established.

14    In the First Judgment I noted that RM Capital refused to admit that in respect of each of these specific occasions, SMSF Club was giving financial product advice to the 52 Clients. But RM Capital has never advanced any evidence or other reason to contradict the SMSF Club SOAF in this regard.

15    The SMSF Club SOAF contains admissions by SMSF Club that at the initial meetings with the Clients that are described in the First Judgment, the SMSF Club adviser would provide advice about, among other things, the advantages and disadvantages, including risks, of having an SMSF in circumstances where the Client was considering buying property through an SMSF.

16    For reasons explained in the First Judgment at [21], the Clients' prospective or actual interest in an SMSF was a financial product within the meaning of s 766B of the Corporations Act, so advice about the advantages and disadvantages of having an SMSF was plainly financial product advice within the meaning of s 766B (it is not necessary to trace through all the definitions to explain why).

17    On the basis of all the matters set out above I therefore find, as between ASIC and both defendants, in relation to each Client, that the referral fee specified in respect of the Client was received by SMSF Club pursuant to the referral agreement in circumstances where SMSF Club had provided financial product advice as defined in s 766B of the Corporations Act to the Client in connection with the establishment of an SMSF for the purpose (if not necessarily the sole purpose) of acquiring property through PRE.

18    It follows, as the SMSF Club SOAF says, that the fees received by SMSF Club as specified in the schedule to that SOAF were conflicted remuneration received by SMSF in contravention of s 963G(1) of the Corporations Act. The relevant statutory framework is set out comprehensively in the First Judgment at [55]-[67] and, again, will not be set out here. It is enough to say that the SMSF Club SOAF stipulates, in relation to each referral fee accepted in respect of a Client, that because of the nature of the benefit and the circumstances in which it was given, it could reasonably be expected to influence the choice of financial product recommended by SMSF Club to retail clients including the Client.

19    That is evidently correct; if SMSF Club was going to receive a referral fee in the thousands of dollars when the Client purchased property through an SMSF, that could reasonably be expected to influence the choice of financial product (namely, an interest in an SMSF) and the financial product advice given (for example, to set up an SMSF in order to purchase property).

20    It follows from the definition of 'conflicted remuneration' for the purposes of s 963G(1) as set out in the First Judgment that on each occasion in respect of each Client, SMSF Club accepted conflicted remuneration in contravention of that subsection. The SMSF Club SOAF proceeds on the basis that under transitional arrangements described at [66]-[67] of the First Judgment, there was no contravention of the section before 1 July 2014. This depends in part on the time at which the referral agreement was made, about which there is uncertainty. But, again, nothing turns on it; on any view, from that date if not before, SMSF Club could contravene the section, and I find that it did for the reasons given. The earliest occasion of contravention in the SMSF Club SOAF is dated 18 November 2014.

21    There are other facts agreed in the SMSF Club SOAF which go to the question of relief so they will be described when I come to determine the third question below.

THE RELIEF TO BE GRANTED AGAINST RM CAPITAL

22    The answer to the separate question addressed in the First Judgment is to the effect that, between August 2013 and August 2016, RM Capital failed to take reasonable steps to ensure that SMSF Club did not accept conflicted remuneration.

23    ASIC seeks the following relief against RM Capital on the basis of the single contravention of s 963F of the Corporations Act which is the subject of the findings in the First Judgment:

(a)    a declaration as to the contravention;

(b)    a pecuniary penalty in a sum to be determined by the Court;

(c)    an order requiring RM Capital to have appropriate systems, policies and procedures in place to ensure that its representatives comply with s 963G and to provide ASIC with a written report of an independent expert as to its compliance with that requirement; and

(d)    RM Capital pay ASIC's costs of the proceeding to be assessed if not agreed.

24    ASIC proposes a quantum of $650,000 for the penalty.

25    RM Capital does not oppose any of these orders, save that it did make submissions as to the quantum of the penalty in opposition to the submissions that ASIC made. It contends that a penalty of the size sought by ASIC would be oppressive in its severity. The submissions of each party will be addressed in the course of considering various factors relevant to the penalty, after the summary of principle below.

Principles

26    As was made clear in the First Judgment (at [33]), ASIC only alleged one contravention of s 963F by RM Capital, rather than multiple contraventions during the relevant period. For a body corporate like RM Capital, the maximum penalty for a contravention, for which s 1317G(1F)(b) of the Corporations Act provided during the period of the contravention, was $1 million.

27    The primary, if not sole, objective of civil pecuniary penalties is the promotion of the public interest in compliance with the relevant legislation by means of deterrence of further contraventions: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13; (2022) 274 CLR 450 at [9] (Kiefel CJ, Gageler, Keane, Gordon, Steward and Gleeson JJ). The penalty ordered must have the sting or burden that is necessary to secure specific and general deterrence, so that it is not regarded just as an acceptable cost of doing business: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2018] HCA 3; (2018) 262 CLR 157 at [116] (Keane, Nettle and Gordon JJ); Pattinson at [17]. At the same time, the penalty must not be greater than is necessary to achieve the object of deterrence; to go further is oppressive severity: NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 at 293 (Burchett and Kiefel JJ), quoted with approval in Pattinson at [40]. An appropriate penalty is one that strikes a reasonable balance between deterrence and oppressive severity: Pattinson at [41], [46].

28    Non-exhaustive lists of factors that may be taken into account in setting a penalty are well established; I gratefully adopt without repeating here the concise summary provided by O'Callaghan J in Australian Securities and Investments Commission v Financial Circle Pty Ltd [2018] FCA 1644 at [179]-[180]. To the extent that they are relevant in this case, those factors will be addressed below.

29    Overall, as O'Callaghan J said in Financial Circle at [178]:

The size of the penalty is a matter of discretion ([Australian Securities and Investments Commission v Adler [2002] NSWSC 483] at [126]) and the process of fixing the quantum is not an exact science(Australian Securities and Investments Commission v GE Capital Finance Australia [2014] FCA 701 (GE Capital) at [75]). All of the circumstances must be weighed and the approach which should be adopted is one of 'instinctive synthesis' (GE Capital at [75]). Attention should be paid to the maximum penalty fixed by the statute, so as to compare the worst possible case with the one before the court (GE Capital at [75]).

30    However that last sentence needs to be read in light of the confirmation by the High Court in Pattinson at [49]-[55] that the maximum penalty is but one yardstick that ordinarily must be applied, and does not constrain the discretion of the Court beyond requiring a reasonable relationship between the theoretical maximum and the penalty imposed.

31    It will be seen that RM Capital's capacity to pay a penalty loomed large as an issue here. In that regard, the plurality in Pattinson (at [60]) said:

it is simply undeniable that, all other things being equal, a greater financial incentive will be necessary to persuade a well-resourced contravenor to abide by the law rather than to adhere to its preferred policy than will be necessary to persuade a poorly resourced contravenor that its unlawful policy preference is not sustainable.

32    However subsequent Full Court authority indicates that this consideration, while relevant, is not determinative. In Electoral Commissioner of the Australian Electoral Commission v Laming [2024] FCAFC 109; (2024) 304 FCR 561 at [26], Logan J (Perry and Meagher JJ agreeing) spoke approvingly of Abraham J's treatment of the subject in Australian Securities and Investments Commission v Select AFSL Pty Ltd (No 3) [2023] FCA 723 when his Honour said:

The reason why Abraham J considered that the financial position of a respondent could not be determinative flowed from a line of authority which she identified in Select AFSL, at [119] - [120]. Of these, it is only necessary to mention this observation made by the Full Court (Heerey, Finkelstein and Allsop JJ) in Australian Competition and Consumer Commission v High Adventure Pty Ltd [2006] ATPR 42-091, at [11]:

Moreover, as deterrence (especially general deterrence) is the primary purpose lying behind the penalty regime, there inevitably will be cases where the penalty that must be imposed will be higher, perhaps even considerably higher, than the penalty that would otherwise be imposed on a particular offender if one were to have regard only to the circumstances of that offender. In some cases the penalty may be so high that the offender will become insolvent. That possibility must not prevent the Court from doing its duty for otherwise the important object of general deterrence will be undermined.

The later, emphatic affirmation in Pattinson of the objective of deterrence as the rationale for a civil penalty regime underscores the correctness of this observation. If penalisation at a particular level is necessary to achieve the objective of deterrence in the circumstances of a given case then the fact that the penalty may be ruinous for the respondent individual or corporate respondent concerned is no reason not to fix penalty at that level. A penalty so fixed will not be oppressive …

33    Generally, if a defendant seeking to rely on its financial position to argue for a lower penalty fails to adduce sufficient evidence to establish that position, that will undermine the argument: see e.g. Australian Communications and Media Authority v Limni Enterprises Pty Ltd (formerly known as Red Telecom Pty Ltd) [2022] FCA 795 at [132] (Perry J); Select AFSL at [113]-[119].

The factors relevant to penalty here

34    I will now consider the submissions made by each of ASIC and RM Capital about a range of factors said to be relevant to the issue of penalty here. I will also express some findings or conclusions about them, deferring final determination of the appropriate penalty until the end. But first, I will address a few general submissions.

35    ASIC points out that, for reasons expressed in the First Judgment at [81], the obligation to take reasonable steps to ensure that authorised representatives of the holder of an AFSL do not accept conflicted remuneration is an important one. That is in the context of the stated objectives of Ch 7 of the Corporations Act as including the promotion of fairness, honesty and professionalism by those who provide financial services: s 760A(b).

36    I accept that submission. As explained in the First Judgment at [54] and [81]-[83], the obligation in s 963F takes its place in a regulatory scheme that places considerable reliance on the role of an AFSL holder to ensure the competence of its representatives and the lawfulness and propriety of their conduct. Further, the obligation RM Capital breached was enacted for the benefit of retail clients of financial services providers, many of whom will be in a relatively vulnerable position. This is a matter to which I will give weight in assessing a penalty. I will do so conscious of course that the maximum penalty, while but one yardstick, provides a direct indication of Parliament's view as to the seriousness of contraventions of the section.

37    Another submission, by RM Capital, is that 'compliance with the requirements imposed upon the holder of an AFSL under s 963F of the Corporations Act is not an end in itself'. Rather, the 'end sought to be achieved by s 963F is the prevention of representatives receiving conflicted remuneration'. RM Capital also says that what had to be done for RM Capital to comply with the obligations imposed upon it by s 963F involved the implementation of particular systems and processes. But its submissions never made it clear what is said to follow from these two points, so I will pay them no further regard.

38    In the discussion below, unless otherwise stated paragraph references are to the First Judgment.

Seriousness, dishonesty and deliberateness of the conduct

The parties' submissions

39    ASIC submits that while RM Capital's conduct was not dishonest or deliberate, it was not only careless but reckless. ASIC submits that I should infer that RM Capital's principals paid 'lip service' to compliance.

40    ASIC says that the risk that the referral agreement between SMSF Club and PRE was a breach of the ban on conflicted remuneration was obvious, and yet RM Capital took no steps directed at preventing that contravention. ASIC also makes submissions that RM Capital's operations more generally posed a risk of contravention of s 963F, but I have no regard to this. That is because the separate question, and so the conclusion reached in the First Judgment, is concerned solely with the acceptance of conflicted remuneration by SMSF Club during the relevant period, not the risk of breach by other authorised representatives more broadly.

41    ASIC also submits that the conduct was systemic, in that involved a failure to have adequate systems or processes in place. Again, this point is relevant only in so far as it contributed to the breach found in the First Judgment, concerning the acceptance of conflicted remuneration by SMSF Club.

42    Further, the conduct occurred over a sustained three year period. ASIC therefore submits that while not at the highest level of seriousness, it is comfortably higher than the midpoint of the spectrum.

43    ASIC relies on the list of reasonable steps which, as found in the First Judgment (at [343]), RM Capital should have taken in order to ensure that its authorised representatives, including SMSF Club, did not accept conflicted remuneration. I will not set them out again here: in broad terms, they involved basic matters such as having a clear written policy on the subject, the appointment and training of representatives, having a procedure to vet new approved financial products, auditing client files, and taking appropriate steps (such as obtaining legal advice) if concerns were identified.

44    ASIC then relies on various findings in the First Judgment to the effect that RM Capital failed to take any of these steps. In summary:

(a)    RM Capital's adopted policy on conflicted remuneration was rudimentary and was not applied [348];

(b)    RM Capital's explanations as to why it did not adopt a policy dedicated to the subject were unsatisfactory, particularly after shortcomings in its draft policy were drawn to its attention by Saxo Capital Markets (Australia) Pty Ltd [201], [349];

(c)    no aspect of RM Capital's process for selecting or appointing representatives included steps specific to the conflicted remuneration ban [249];

(d)    the evidence did not establish that before putting a financial product on its approved product list, RM Capital had any practice of vetting products for arrangements that might involve conflicted remuneration, let alone any documented procedure, and if the issue was considered for this purpose it was done on an inconsistent basis [262];

(e)    RM Capital had insufficient information about the arrangement between SMSF Club and PRE to make a credible assessment of it for the purposes of the conflicted remuneration ban, and the way that PRE came on to the approved products list illustrates RM Capital's ad hoc and inconsistent approach [265]-[266];

(f)    the risk that the PRE referral agreement involved the acceptance of conflicted remuneration was obvious and RM Capital should have obtained legal advice on it, but did not [329], [332]-[333];

(g)    RM Capital did not provide any training on conflicted remuneration for its representatives during the relevant period and so did not comply with its own training policy [254]-[255]; and

(h)    the heightened risk of contravention in the circumstances of SMSF Club meant that RM Capital should have engaged in reasonably intensive monitoring of its activities to ensure that it did not accept conflicted remuneration, but instead audits of SMSF Club's client files in respect of conflicted remuneration were infrequent during the relevant period and concerned only a small number of files, and when SMSF Club representatives expressed incorrect understandings of the conflicted remuneration ban, that was not investigated or corrected [236]-[237], [340]-[341].

45    RM Capital maintains that its conduct should be characterised as it having been aware that it needed to take reasonable steps to ensure that representatives did not accept conflicted remuneration, and taking some steps, but that falling short of the steps required to discharge the obligation. This is not as bad, it says, as a company that deliberately and knowingly fails to take steps that could have discharged its obligations, or a company that has failed to inform itself of its obligations.

46    That is particularly so given that the precise steps that must be taken are left to the AFSL holder to determine in the circumstances and where, as is found in the First Judgment, there are no hard and sharp rules: [74]. RM Capital says that the Court should be cautious in imposing a penalty which implies a significant degree of culpability where the standard that has not been met is itself inherently ambiguous (albeit necessarily so).

47    The First Judgment contains findings that RM Capital, by (at least) its director and principal James Richardson, knew about the ban on conflicted remuneration and its obligations under s 963F. And RM Capital says that there are findings in the First Judgment that it did take steps, in particular:

(a)    amending a pre-existing compliance programme to adopt one that referred to the ban and provided for a monitoring procedure in connection with it [247];

(b)    only appointing as employees or representatives of RM Capital persons with the appropriate education and character [248];

(c)    conducting training sessions when the FOFA reforms came into effect which referred to the ban on conflicted remuneration (although the sessions that included SMSF Club personnel did not cover the ban) [251]-[253];

(d)    maintaining an approved product list including considering whether products on that list complied with FOFA reforms including issues of conflicted remuneration [262]-[269]; and

(e)    monitoring and supervision of representatives, in that it had the remuneration of representatives paid directly to it, so that it paid close attention to the remuneration that its representatives were receiving [270]-[280].

48    The point RM Capital makes on the basis of these findings is that, while the steps it took fell far short of those it needed to take to comply with s 963F, it cannot be said that its conduct was serious, dishonest, deliberate or systemic. It was a small organisation, aware of its obligations, which took steps to comply with those obligations, albeit insufficient steps.

49    Counsel for RM Capital accordingly characterised the flavour of the criticism of RM Capital in the First Judgment as being 'that what it did lacked system and rigour and proper methodology and was far too informal and ad hoc to give assurance that it would preclude against representatives receiving conflicted remuneration'.

50    Counsel for RM Capital also sought to make a point about hindsight. He acknowledged that in the First Judgment, it was found that the steps ASIC said it should have taken were not tainted by hindsight: [346]. But he submitted that whether the need to take those steps was something that RM Capital should have appreciated as abundantly clear at the time is a different matter.

Findings and conclusions about seriousness, dishonesty and deliberateness

51    It is common ground that the evidence does not support any finding that RM Capital's conduct was dishonest, or that it deliberately failed to take reasonable steps to ensure that its authorised representatives did not receive conflicted remuneration.

52    Nor do I find that RM Capital's state of mind concerning its contravention was 'reckless' or that RM Capital was paying only 'lip service to its obligations'. The second of these terms is colloquial and the evidence does not point to the level of cynicism towards the company's obligations that is inherent in the paying of 'lip service'. As to recklessness, the Court is not parsing different mental states for the purposes of determining criminal responsibility. Accordingly, counsel for ASIC submitted that these terms were advanced only as 'somewhat of a term of art', in order to 'distil a sense of seriousness' which could be described as recklessness and to convey that the failures were more than inadvertent and more than negligent.

53    In any event, I do not consider that the facts as a whole support an inference that RM Capital knew that there was a risk that it was not complying with s 963F, but cared not whether it complied. I accept that the inference is open given the supine approach of RM Capital which I am about to recount. But in the end I do not make it because it is a serious inference to make, because another assessment is also reasonably open, and because there was no cross-examination of Mr Richardson on this point.

54    The other assessment just referred to, which is the one I make, is that RM Capital's state of mind in relation to the contravention was grossly negligent. This is indeed not a term of art but a phrase intended to express a sense of seriousness. It is a characterisation that emerges from the detailed findings made in the First Judgment considered as a whole, and that exercise will not be repeated here. But ASIC's submissions above about the findings in the First Judgment are accurate. Even RM Capital's own submissions above on the same subject support the point, because they show how the steps that it did take were general in nature and not specifically directed to conflicted remuneration.

55    In truth, RM Capital took virtually no steps at all that were specific to its obligations under s 963F. There was a brief reference to those obligations buried in a generic compliance policy. To the extent that there was a policy specific to the subject during the relevant period, it was in draft, and so not adopted, and it was materially incorrect. RM Capital conducted some training in early 2013 on the subject when the FOFA reforms were introduced, but it is unlikely that SMSF Club representatives received that training, and it was not repeated in the relevant period. RM Capital conducted some sporadic monitoring as to conflicted remuneration in relation to a handful of client files, with no follow up. It also conducted some vetting of the product list when the reforms were introduced, but there was no evidence that this was done on an ongoing basis so as to capture new arrangements such as the one between SMSF Club and PRE. This was all in a context where the need to take legal advice about the arrangement was quite obvious [332] and the director of SMSF Club had himself told Mr Richardson that it may result in SMSF Club receiving a 'kick back': [103].

56    All this displays a high level of carelessness in relation to RM Capital's obligations under s 963F. As counsel for ASIC submitted, RM Capital's behaviour was blithe, demonstrating 'a lack of assiduousness, a lack of curiosity as to what needs to be done, a lack of treating [the situation] with the seriousness that a consumer protection piece of legislation warrants'.

57    I reject specifically RM Capital's apparent submission that the attention it paid to the fees that SMSF Club received was a step taken to help ensure that they did not accept conflicted remuneration. Although RM Capital did pay attention to the fees its authorised representatives were receiving, this was done at general level and was not designed to enable RM Capital to detect conflicted remuneration. It must be recalled that in the case of the referral fees received by SMSF Club, RM Capital was taking a percentage for itself. The obvious inference, which RM Capital did not displace, is that it was receiving the fees direct from PRE (while that was the arrangement) so that it could be sure that it received its percentage. While that may have given it visibility of the contravening referral fee arrangement, that was by a sidewind. And whatever visibility it did give, RM Capital did not act on that to investigate the legality of the referral fee.

58    RM Capital's failure was not systemic in the sense that it was built in to its systems. The problem was rather an absence of meaningful systems. So it was systemic in the sense that it was not a one off, unfortunate, unusual or unforeseeable lapse. It was, indeed, ongoing over some three years. These matters weigh in favour of imposing a higher penalty.

59    All this means that RM Capital's submissions about different levels of culpability, by comparison to deliberate and knowing breaches or breaches arising out of ignorance, are not to the point. It does not matter that, all things being equal, those states of mind may involve greater culpability than a situation where the contravener, knowing its obligations, took some steps but insufficient ones. In this actual situation, RM Capital may have known of its obligations but its behaviour provides scant reason to think that it had them in mind. So while its own description of itself as a small organisation that took steps to comply with its obligations, albeit insufficient ones, is correct as far as it goes, it does not go far enough to capture how seriously those steps fell short. It was far more than a lack of 'system and rigour and proper methodology'. It was a signal failure to take any meaningful steps.

60    For the same reasons, I do not accept that the lack of hard and sharp rules is mitigatory in this situation. As already said, the s 963F obligation was an important part of the regulatory scheme and, while some situations may be in a grey area, this is not one of them. RM Capital's compliance with the obligation was woefully inadequate. That this is so should have been apparent during the relevant period; it is not just the judgment of hindsight.

Whether the contravention arose out of the conduct of senior management

The parties' submissions

61    ASIC submits that the two directors of RM Capital, Mr Richardson and Guy Le Page, were responsible for the company's compliance activities: [246]. So it was a failing on the part of senior management that led to the contravention. This is particularly so because RM Capital relied largely on the existence of an approved product list as a defence, a list that was maintained by a Research Committee which included Mr Richardson and Mr Le Page.

62    RM Capital accepts that the steps it needed to take, and its failure to take them, were the responsibility of Mr Richardson and Mr Le Page. It submits, however, that considerations of whether the contravention arose at senior management level, or at some lower level, carry much less weight in circumstances where the contravention related to the implementation of systems and procedures. It says that these are matters necessarily driven from the top of an organisational hierarchy (rather than specific actions which may have occurred because of the conduct of individual lower level actors). This is also the case with respect to an organisation such as RM Capital which was a relatively small company, the directors of which were not separated from day to day operational activities.

Conclusion as to senior management responsibility

63    It is not, with respect, abundantly clear what point RM Capital is making here. It may be accepted that in a small organisation, there is unlikely to be any meaningful separation between senior management and the rest of the staff. But the fact remains that the responsibility for complying with s 963F, and for the failure to comply, rests with its senior management. The organisation as a whole is therefore to be fixed with that responsibility. To put it another way, RM Capital is not in a position to say that the failure was the fault of low level employees of which its senior management, and so the company itself, were unaware.

64    It is not a matter of judging finely how much weight is to be put on this. It is, rather, a matter of the lack of anything exculpatory in connection with this factor. RM Capital accepts this. That the responsibility is to be fixed on the company as a whole is simply a fact to be taken into account, albeit a fundamental and important one.

The character of RM Capital, culture of compliance and remorse

65    ASIC submits that the factors listed in the heading above are closely interrelated in this case. It submits that they weigh in favour of a substantial penalty. The nature and extent of the submissions made on this subject means that it will be convenient to present the submissions, and my views, point by point.

No culture of compliance during the relevant period

66    The First Judgment, including the matters canvassed above, amply demonstrates that RM Capital did not have a culture of compliance during the relevant period.

67    It is not necessary to give specific references; the overall picture is that while RM Capital retained third party service providers to manage its compliance activities, that did not result in any effective policy, training or monitoring frameworks to guard against the risk of conflicted remuneration on the part of SMSF Club. As mentioned above, even when audits exposed deficiencies in the understanding of the ban on the part of SMSF Club, no consequences followed. When deficiencies in RM Capital's own draft policy were pointed out to it, that was not followed up in any way: [205]. Even by the time of the hearing, Mr Richardson appeared to lack a firm grasp of the regulatory environment: [91].

68    RM Capital does not contend that its culture of compliance was sufficient. It does, however, submit that matters such as a culture of compliance, and whether the contravening conduct was systemic, deliberate or covert, carry less weight in relation to a contravention of an obligation of the nature of that imposed by s 963F than they may carry in other circumstances. RM Capital draws a contrast with the prohibition on the holder of an AFSL itself accepting conflicted remuneration that is imposed by s 963E. The point being made here, it seems, can be found in the submission that the 'contravention did not come about as a consequence of inadequate systems and procedures - the contravention was itself comprised of particular systems and procedures being inadequate'. So, RM Capital submits, it would be circular to treat this as a factor going to penalty, when the lack of a culture of compliance is the very contravention itself.

69    Another way it was put is that it would be 'almost double counting' to say, first, there is a breach that consists of inadequate compliance systems, and then to say that a lack of adequate compliance systems is an aggravating factor.

70    I do not accept these submissions. The contravention was a failure to take reasonable steps. It is true that a lack of systems and a culture of compliance made it almost inevitable that reasonable steps would not be taken, but the contravention and its causes are not the same thing. RM Capital's signal lack of a culture of compliance during the relevant period cannot be swept aside this way.

71    It must be recalled that the paramount purpose of setting a penalty is deterrence, specific and general. The relevance of a culture of compliance is to be assessed in that context. A contravention that is an unfortunate slip on the part of an organisation with a strong culture of compliance warrants a lower penalty than a contravention that is the inevitable result of a lack of any real culture of compliance in a different organisation.

72    For the first organisation, a relatively low penalty will be required to ensure that the failing is rectified and the contravention does not happen again (specific deterrence), and a relatively low penalty will be sufficient to send a signal to the wider business community that organisations which have similarly strong cultures should continue to strive to avoid similar failings (general deterrence).

73    In contrast, the second organisation, having displayed little motivation or appetite to comply, may need a large penalty to shock it into changing its ways (specific deterrence) and a similarly large penalty may be necessary to motivate similarly lax organisations in the wider community to do the same (general deterrence): see e.g. Australian Competition and Consumer Commission v Delta Building Automation Pty Ltd (No 2) [2024] FCA 580 at [46], [79] (Bromwich J).

74    Regrettably, RM Capital falls squarely into the second category of organisations. I reject its attempt to deflect attention from what was, on any view, a poor culture of compliance on its part, and a paucity of systems. Those are matters on which I place considerable weight in determining the penalty necessary to achieve specific and general deterrence.

Culture of compliance after the relevant period

75    The considerations of specific and general deterrence I have just described are relevant, not just to the organisation's culture at the time of the contravention, but also to its culture since then.

76    As to conduct after the contravention, RM Capital did not acknowledge that it committed a contravention and contested it to the last opportunity. Hence the need for the First Judgment. ASIC says that RM Capital has not shown any remorse. ASIC submits that this reflects poorly on RM Capital's corporate character. I accept these submissions. While RM Capital had every right to contest ASIC's allegations, the fact is that it has not displayed any remorse at any stage, even since the contravention was found to have occurred: see Delta Building at [46].

77    As for concrete steps to ensure compliance since that contravention, ASIC points out that it delivered particulars of what would have been required for RM Capital to comply with s 963F in May 2021. ASIC says that RM Capital could have complied with those steps from that time, without admitting liability and while remaining free to contest the proceeding. And ultimately those particulars were largely if not entirely vindicated by the First Judgment. ASIC makes the further submission that even after the First Judgment exposed the failings in RM Capital's compliance practices, it failed to take steps to rectify those failings.

78    Given the findings in the First Judgment about the lack of any real culture during the relevant period, it was incumbent on RM Capital to show that its practices had improved since then. In fact, RM Capital has put on a limited amount of documentary evidence on the subject, and it adduced no evidence from any of its officers or compliance consultants to explain what steps it has taken since the relevant period. The documentary evidence relevant to these findings falls into four categories: compliance policies, representative reviews, training, and advisor declaration forms.

Compliance policies

79    RM Capital has discovered three versions of its 'Managing Conflicted Remuneration' policy since the First Judgment, on which the parties relied in relation to steps taken by RM Capital since the contravention period. The policies are dated December 2022, March 2023 and March 2024. (It also discovered a previous iteration of the policy dated September 2018 but no party made anything of this, save that ASIC pointed out that it did not contain an error about personal advice found in the later policies which is about to be described.) The First Judgment was delivered on 29 February 2024, so while its findings cannot be expected to have been assimilated into these policies on publication, there is no suggestion that they have been updated since then. I therefore take it that the three policies produced by RM Capital relating to the relevant period are the best evidence of its policies that could be produced.

80    It is common ground that there is no material difference between the three versions of the 'Managing Conflicted Remuneration' policy referred to above.

81    ASIC makes two criticisms of the 'Managing Conflicted Remuneration' policies. First, the policies say (emphasis in original):

This policy should be read in conjunction with the Managing Conflict of Interest policy which is established by the licensee to address overall conflicts management processes. Conflicted remuneration arrangements requirements only apply to where personal advice is provided to retail clients of the licensee as well as their representatives.

ASIC submits that it was clear from the First Judgment that limiting the obligation to personal advice (a defined term/term of art under Ch 7 of the Corporations Act) is incorrect (at [61], [77], [278]), something Saxo Capital told RM Capital as long ago as January 2014: at [201].

82    Second, the recent 'Managing Conflicted Remuneration' policies produced by RM Capital assume that conflicted remuneration can be 'managed' by client disclosure. While they each say that 'R M Capital must ensure that no banned conflicted remuneration is received', they then indicate that this can be done as follows:

Where a conflicted remuneration is likely to be received, R M Capital will take necessary steps to:

•    Ensure the benefit/s to be received will meet the definition of an excluded benefit under RG 246 and/or (refer to REGULATORY GUIDE 246: Conflicted and other banned remuneration for list of excluded benefits).

•    Seek client consent to receive those benefits (refer Standard 7 of The Code detailed above)

•    Provide disclosure to the client via FSG, SOA or other form of disclosure e.g. brokerage statement, trade confirmation etc. and Annual Fee disclosure statements on the benefits received / receivable

83    ASIC submits that the second and third bullet points perpetuate the error that the ban can be overcome by client consent or disclosure. Again, the First Judgment made clear that this is not correct: [63], [198].

84    RM Capital submits that the 'Managing Conflicted Remuneration' policies correctly define conflicted remuneration and accurately describe the prohibition. It seeks to defend the statement about personal advice that ASIC criticises by submitting that the statement 'is speaking to particular arrangements, not the ban on conflicted remuneration per se' and the rest of the policy describes the ban correctly. Counsel for RM Capital expanded on this by submitting that in the context of referring to the 'Managing Conflict of Interest policy', the impugned statement about personal advice is saying that there are particular additional requirements imposed with respect to arrangements that may involve conflicted remuneration.

85    As to the point criticised by ASIC that the policy appears to contemplate that client consent can be sought for conflicted remuneration, counsel for RM Capital submitted that this is a requirement that refers to statutory exclusions from the scope of the prohibition.

86    RM Capital further submits that the 'Managing Conflicted Remuneration' policies contain other measures that are correct and appropriate, such as a blanket statement that '[e]xcept where expressly permitted by the Corporations Act, RM Capital and/or their representatives may not receive any benefits, in connection with acting for a client, that derive from a third party'. It drew the Court's attention to other features of the policy including that:

(a)    before establishing new business arrangements, they are reviewed to ensure that no banned conflicted remuneration is received, with excluded benefits assessed via a conflict management process;

(b)    RM Capital and representatives are prohibited from third party benefits unless permitted by the Corporations Act;

(c)    conflicted remuneration is reviewed annually through licensee compliance assessments and ongoing suitability checks;

(d)    conflicted remuneration arrangements are identified via board or compliance meetings, investment committees, payroll, declarations, and internal and external reviews; and

(e)    'operational processes and tools' are also employed, including reviews of the approved products list, quarterly self-declarations by representatives, weekly tax invoice approvals, addressing remuneration arrangement questions in the form for requesting additions to the approved products list, requiring licensee approval for all third party arrangements, circulating training documents, and weekly meetings.

87    As to the item in (e) about the form to add products to the approved products list, being a subject that received some consideration in the First Judgment, RM Capital also refers to its 'Research and Benefits Policy' (the version dated November 2023). This contains a requirement for RM Capital's Research Committee to consider whether there are actual or perceived conflicts of interest before adding a product and states that this must be managed in accordance with RM Capital's 'Managing Conflicted Remuneration Arrangement' policy.

88    I  accept that the 'Managing Conflicted Remuneration' policies must be read and assessed as a whole; it would be a mistake to focus exclusively on the two particular matters which ASIC criticises (at [81]-[82] above). But I do not accept that RM Capital has explained the first of those matters satisfactorily. Even after considering RM Capital's submission and reading each policy as a whole, I am unable to read the passage 'Conflicted remuneration arrangements requirements only apply to where personal advice is provided to retail clients of the licensee as well as their representatives' as anything other than an incorrect statement to the effect that the conflicted remuneration ban only applies to personal advice. Contrary to RM Capital's submission, it does not appear to be referring to particular arrangements only (not that RM Capital has said what those particular arrangements are). It speaks of 'conflicted remuneration arrangements requirements' generally. And the interpretation put by RM Capital, that the passage refers to unspecified additional requirements imposed with respect to arrangements that may involve conflicted remuneration, simply does not emerge from the words used, whether read alone or in the context of the rest of the document.

89    Certainly many authorised representatives would reasonably understand the passage as confining the prohibition against accepting conflicted remuneration to the provision of personal advice. While that is belied by other statements in the policy, it introduces regrettable uncertainty and, given its specificity, is likely to mislead some authorised representatives into an incorrect understanding of the law. As counsel for ASIC submitted, it cannot be comprehended easily and is therefore not 'doing its job of guiding the organisation to prevent the acceptance of conflicted remuneration'.

90    As to the second aspect criticised by ASIC, I accept the submission of RM Capital that the requirement to 'seek client consent' is a requirement in relation to 'those' benefits, being the benefits excluded from the prohibition which are referred to in the previous bullet point: see [82] above. It follows that the third bullet point about disclosure to the client is also referring to those benefits. So the requirement for client consent in this context is not incorrect or inappropriate. But the alternative reading put by ASIC is open, and indeed is the likely reading in the absence of close scrutiny of the passage, such as I have given it. This ambiguity and potential for misunderstanding is a further deficiency in the policy.

91    Further, counsel for ASIC submitted, and I accept, that the policy shows a continued conflation, or at least blurring, of the equitable and ethical concept of a conflict of interest and the more specific legislative term, conflicted remuneration. This is all especially concerning after the delivery of the First Judgment, which made it clear repeatedly that it was incorrect to approach the legislative requirement as though it could be met by taking measures that may be appropriate to address a conflict of interest, such as disclosure or client consent: for example [61], [63], [198]-[201], [207], [237], [257], [259].

92    Overall, I accept that the aspects of the 'Managing Conflicted Remuneration' policies to which RM Capital points are correct and appropriate and their presence in a policy adopted by RM Capital (rather than a mere draft policy) represents an improvement in the company's compliance with s 963F. But the deficiencies I have referred to limit the weight that can be put on the policy. Certainly, in the absence of direct evidence that it has been disseminated throughout the organisation and to authorised representatives and consistently applied, it is not a basis on which to conclude that RM Capital now has a strong culture of compliance.

Client file reviews

93    ASIC points to the results of client file reviews which RM Capital's compliance service provider carried out with its authorised representatives at various times from March 2021 to September 2023. Two questions in the reviews concerned conflicted remuneration.

94    The first question was:

Provide details of Representatives [sic] understanding of what is a conflicted remuneration arrangement under FOFA.

95    There were 45 such reviews and it is not possible to set all the responses out. But it can be said that many representatives are recorded as having given vague responses, as though the question was about managing conflicts of interest generally. An example is:

Representative noted conflicting interest with clients, preferential products and anything that makes advice not in interest of client.

That response was recorded, word for word, in 10 reviews, covering four different representatives.

96    Other examples are:

Advisor was aware of conflict of interest and process to identify as well as ensure no arrangements are put in place that would create a conflict with the client.

…

Peter was aware of conflict of interest and process to identify as well as ensure no arrangements are put in place that would create a conflict with the client. He is aware of requirements to ensure advice does not conflict with client or competes with client interests.

97    One representative, while answering the question in a largely correct manner, in three reviews went on to display the apparently common mixing up of conflicted remuneration and conflicts more generally:

A payment that can influence your decision on a product or service recommendation. Referral payments if not transparent than would also be a conflict.

98    As ASIC submits, there is no clear evidence that the incorrect or vague understandings reflected in many of these answers led to any steps to educate the representatives as to the correct position, or any corrective steps at all. In its written submissions filed shortly before the penalty hearing, RM Capital acknowledges that 'some representatives of RM Capital continue to misapprehend the effect of the ban on conflicted remuneration'. In his oral submissions, counsel for RM Capital attributed the apparent lack of action to a failure by the compliance service providers who conducted the reviews to draw the answers to RM Capital's attention. While he did not do so on the basis of any positive evidence to that effect, I infer that RM Capital has not taken any action to rectify the concerns that emerge from the vague and incorrect answers summarised above.

99    The second relevant question in the reviews was:

Would payments received or paid from referral arrangements, third parties and/or financial institutions which are not paid directly from client funds require assessment under conflicted remuneration?

100    Almost without exception, the representatives responded by saying that they would discuss the arrangement with the licensee, RM Capital. ASIC submits that this is unsatisfactory and concerning, given the representatives' largely incorrect understandings of the ban as disclosed by their answers to the first question. But I do not accept that. It is appropriate for representatives to say that they would consult the licensee to help with the assessment of such arrangements.

101    As has just been mentioned, in oral submissions counsel for RM Capital said that the reviews were appropriately carried out on the company's behalf by a compliance service provider, and it was reasonably open to RM Capital to rely on them to bring to its attention answers that are cause for concern. I do not accept that. While, unlike in the First Judgment, it is not the Court's task to rule definitively on what were or were not reasonable steps, it can be said that for RM Capital to take the passive approach of waiting for an external service provider to inform it of problems, rather than taking an active interest in what representatives have said and asking the service provider (at least) about that, does not reflect well on its culture of compliance.

102    I am conscious that RM Capital is a small organisation with limited resources. But in its capacity as an AFSL holder, these responsibilities were not mere inconvenient distractions from its business activities; they were core responsibilities. That RM Capital took this passive approach even in the face of an ASIC investigation, an adverse liability judgment, and an approaching penalty hearing, suggests that from the point of view of specific deterrence, at least, a high penalty may be necessary to motivate it to change its approach.

Training

103    RM Capital appears to submit that it conducted a compulsory training day in the latter half of 2024 which covered conflicted remuneration rules and procedures. However, RM Capital has not provided any evidence as to when this training occurred.

104    The sole evidence as to this training day is a slide presentation titled 'Compliance Update' which appears to have been prepared by RM Capital's external compliance service provider. Counsel for RM Capital submitted that based on the dates referred to in the presentation, it could be inferred that the presentation was prepared 'no sooner than October or November 2024'. ASIC disputes that this is evidence of training and points out that there is no affidavit or documentary evidence as to who attended, or whether anyone did. It went so far as to object to the admission of the presentation into evidence because, not being evidence of training, it is irrelevant. I do not accept that. It can be inferred from the form and content of the presentation that it was indeed likely to have been presented, presumably to staff and representatives of RM Capital. But I do accept that the lack of any evidence about when the presentation occurred, how many people received the presentation, or who those people were, limits the weight to be put on it.

105    ASIC also points out that the slide about conflicted remuneration in the presentation does not say that the practice is banned. Further, a bullet point on the next slide presents as a 'Key Compliance and Procedural Element' that 'Clients must give free, prior, and informed consent for all benefits received'. This could be taken, yet again, to mean that 'informed consent' makes the acceptance of conflicted remuneration lawful.

106    Further, there is a slide headed 'Alternate remuneration' which says:

What are Alternate Remunerations? [sic]

Alternate remuneration are [sic] benefits non-monetary such as research, data, or other services and benefits, given to a licensee or their AR's by a third party in exchange for directing client transactions or assets to the third party.

As ASIC define these benefits as indirect forms of compensation that can create conflicts of interest, appropriate disclosures and management is required to ensure client's best interests are prioritised.

All AR's are required to inform the Compliance Manager of any alternate remuneration received where the Compliance Manager will maintain a record in a register.

107    Again, remarkably in view of the history of the matter, RM Capital has permitted the message to go out to its staff and/or representatives that benefits in exchange for directing business to a third party, which plainly are at risk of being conflicted remuneration, can be addressed by 'appropriate disclosures and management' and that it may be enough to 'maintain a record in a register'.

108    The presentation provides yet more reason to doubt that RM Capital has made real efforts to introduce the culture of compliance that was so plainly lacking during the relevant period. If RM Capital did conduct training on this basis, that is an aggravating factor, not a mitigating one, as it shows that the company is still not taking its obligations under s 963F seriously.

Representative declarations

109    Finally, there is evidence that RM Capital now requires its advisers to complete quarterly declarations that require, for example, all referral agreements, remuneration arrangements and 'alternative' remuneration (e.g. tickets to events) to be declared.

110    ASIC criticised this as backward looking but I do not accept that criticism. It makes sense to ask authorised representatives about arrangements that have occurred, rather than to predict ones that have not yet occurred, and the quarterly cycle for asking the question is appropriate. While not sufficient in themselves as a compliance measure (no one suggests that they are), there is nothing wrong with these declarations as part of a broader compliance regime.

RM Capital's conduct of the proceeding and disposition to cooperate with the authorities

111    ASIC submits that these are factors of aggravation in the present case. RM Capital has contested the proceeding throughout. And it failed to give discovery relevant to penalty after the First Judgment, to the extent that its solicitors did not substantively respond to six letters from ASIC chasing discovery.

112    RM Capital submits that a failure to give discovery in the proceeding cannot have any bearing on the appropriate penalty to impose. I accept that submission and will give the matter no weight as either a mitigating or aggravating factor. I will do the same in relation to RM Capital's conduct of the proceeding as a whole.

RM Capital's size and financial position and its capacity to pay

The parties' submissions

113    Prior to the liability hearing, RM Capital produced financial statements in relation to the period during which the contravention occurred, that is 2013 to 2016. They showed an operation of modest size: [95].

114    RM Capital has produced more recent financial statements for the financial year ending (FYE) 30 June 2022, 30 June 2023 and 30 June 2024. These suggest a similarly modest operation. The statements suggest that the company has been barely profitable, or loss making. In those years the profit figures were: FYE 2022 - $1,036; FYE 2023 - ($278,824), i.e. a loss; FYE 2024 -$115,760 - with net assets that went down from $410,366 in 2022 to $92,601 in 2023 and then back up to $208,361 in 2024.

115    ASIC submits, however, that these statements do not present a true picture of RM Capital's capacity to pay. While for FYE 2023 the company recorded a net loss of $278,824, the largest contributor to that loss was 'Other expenses' of $3,776,835. For FYE 2024 the 'Other expenses' were $3,386,869. The financial statements for FYE 2023 and FYE 2024 do not explain what this consists of, or how it reconciles with the item 'Payments to suppliers and employees' of $4,324,994 recorded in the cashflow statement for FYE 2023 and $4,233,498 in FYE 2024. There was a breakdown of those expenses in the financial statement for FYE 2022. However for FYE 2023 and FYE 2024, ASIC says that it is not clear whether any part of these large sums represent payments to principals.

116    ASIC also draws attention to an amount of $329,066 recorded in FYE 2023 balance sheet as a non-current liability which appears, in fact, to be on call loans by the company to related companies. ASIC says that this error gives cause to doubt other aspects of the balance sheet, in particular the classification of $483,917 in loans to 'Other Related Parties' as non-current assets.

117    ASIC contends that loans to 'Other Related Parties' is defined to include loans to family members of key management personnel and entities controlled by them. This is likely to mean that the loans are payable at call and so should be classified as a current asset. ASIC says that this inference is supported by the fact that by the time of the FYE 2024 balance sheet, these loans had been mostly repaid.

118    ASIC says more broadly that the presence of apparently on call loans between RM Capital and related parties, going both ways, shows that there is a 'ready flow of funds among RM Capital and its related companies and parties (including directors) in the form of loans'. This is said to be a reason to think that RM Capital could obtain further loan funds to pay a penalty.

119    ASIC submits that the financial statements are thus unreliable and says, on the basis of the principle in Blatch v Archer (1774) 1 Cowp 63; (1774) 98 ER 969 at 970, that if RM Capital wished to rely on its financial position as a reason to reduce the penalty, it was incumbent on it to produce reliable evidence of that position. But RM Capital has made the forensic decision not to adduce witness evidence to explain its financial position.

120    RM Capital's response to these submissions about its financial position is:

(a)    the accounts have been prepared in accordance with Australian Accounting Standards and for FYE 2023 and FYE 2024 have been audited;

(b)    the accounts stand as prima facie evidence of any matter stated or recorded in them (Corporations Act s 1305(1));

(c)    there is nothing to suggest that the 'Other expenses' or 'Payments to suppliers and employees' line items are inaccurate;

(d)    the first of these, being in the profit and loss, is calculated on an accrual basis and the second, from the cashflow, on a cashflow basis so there are bound to be differences between them; and

(e)    the statements for FYE 2023 and FYE 2024 record (in Note 5) that no remuneration was paid to key management personnel and say (in Note 19(b)) that transactions with related parties are on normal commercial terms.

121    Further, RM Capital has produced its ledgers recording the breakdown of the 'Other expenses' item.

122    As to the misdescription of the $329,066 as a liability, RM Capital has demonstrated that this did not lead to the net asset figure being incorrect. It was purely a misdescription, but the numbers add up correctly and the misdescription has been corrected in a subsequently issued version of the accounts. ASIC maintains, however, that this error calls into question the accuracy and reliability of the financial statements more broadly.

123    As to RM Capital's ability to borrow to pay a penalty, the company submits that the Court should infer that no one, not even a related party, will lend money to it unless it is able to repay that money, and its ability to repay is still determined by reference to its balance sheet.

Findings and conclusions as to capacity to pay

124    In general, I find ASIC's attacks on the reliability of the accounts unconvincing. For FYE 2023 and FYE 2024 they have been audited. As to the specific criticisms:

(1)    With one possible exception, there is no reason to doubt that the 'Other expenses' line item does indeed refer to third party expenses incurred by RM Capital as part of the costs of its revenue earning activities. The ledgers contain a breakdown of the item; it includes categories such as 'Brokerage', 'Depreciation - Office/Computer Equipment', 'Insurance', and 'Compliance Costs'. Nothing appears out of the ordinary for a business like RM Capital's. General ledger detail giving expense by expense breakdowns for some of the categories are also given. On their face, they are payments to third parties. The one possible exception is a purchase under 'Capital Raising Costs' of $49,490.80 from 'RM Corp Finance' in FYE 2024. This appears to be a related party. But as a single item in one year it is not enough to cast real doubt on the reliability of the 'Other expenses' line items as a whole.

(2)    The misdescription of the on call loans by the company as liabilities was just that - a purely verbal misdescription which did not affect the correctness of the calculations in the balance sheet. It did not, for example, lead to any understatement of the net asset position. It was an isolated inadvertent slip on which I place no weight.

(3)    As to whether the on call loans should have been characterised as a current asset or not, it is difficult to see why this matters. The court is not assessing solvency. Counsel for ASIC appeared to withdraw the point in his reply submissions anyway.

125    Under s 1305(1) of the Corporations Act these accounts, as books of the company, are prima facie evidence of any matter stated or recorded in them. Relevantly for present purposes, it is that, calculated on the accrual basis which is relevant for Australian Accounting Standards, the balance sheet and profit and loss statements 'give a true and fair view of the financial position as at 30 June 2023 [or 30 June 2024] and of the performance for the year ended on that date of the company' (to quote the standard declarations given by the directors and the auditors in them).

126    The company, of course, is RM Capital Pty Ltd. And yet the compliance statements in evidence show that it is part of a corporate group that includes RM Corporate Finance Pty Ltd. No evidence has been presented of that company's financial position. No evidence has been given of the financial position of the directors or the shareholders. Consistently with the approach in Limni and Select AFSL, if RM Capital wished to rely on its modest size as a factor speaking against the imposition of a substantial penalty, it was incumbent on it to produce convincing evidence, not just of its financial position considered alone as a separate entity, but also as to the financial resources available to it from other entities.

127    Contrary to a submission put by RM Capital's counsel, this does not require 'complete evidence' of its financial position; it requires sufficient evidence to persuade the Court that imposing a penalty of a certain amount will lead to significant adverse consequences for the company, in that it will not be able to afford to pay. Nor does it stretch the proposition to its 'breaking point' to expect disclosure (or exclusion) of potential sources of borrowings. Counsel sought to equate this to speculation about the existence of a 'a childless uncle or aunt out there with great wealth that would be willing to assist'. But it is not that; it is simply a combination of the notorious fact that companies often have shareholders, directors and other backers, and are often part of corporate groups, that give them access to financial resources that are not on their balance sheets, together with the placement of the practical onus in this matter on RM Capital. It is also an application of the ancient principle in Blatch v Archer that whether RM Capital has discharged that onus is to be weighed in light of its failure to call more evidence that would have shed light on its true capacity to pay: see Coshott v Prentice [2014] FCAFC 88; (2014) 221 FCR 450 at [80]-[81].

128    Where does all this leave the Court in assessing RM Capital's ability to pay a penalty? For all the above reservations, I accept that RM Capital is a relatively modest private enterprise, and it would be oppressive to proceed on the basis that it has the same capacity to pay a penalty as an S&P/ASX 200 company. But by the same token, I am not satisfied that it cannot draw on financial resources, not revealed in its accounts, in order to pay the penalty. Further, as explained above, there is the need for general deterrence. The extent to which I am prepared to put weight on its financial resources as a reason to reduce the penalty is therefore limited.

Other factors

129    RM Capital also relies on the following matters as relevant to the penalty to be imposed:

(a)    the lack of any evidence that any client suffered loss as a result of the contravention, or evidence that the contravention has caused harm to any third party;

(b)    there is no suggestion that RM Capital has previously contravened s 963F or any other provision of the Corporations Act or any other laws;

(c)    the quantum of revenue derived by RM Capital from the referral fees paid to SMSF Club was small, being $70,215; and

(d)    the likelihood that RM Capital will be subjected to an order to pay ASIC's costs, which are likely to be significant given the multi-year period during which the investigation and litigation have been conducted - RM Capital submits that its ability to pay the penalty and the deterrent effect on it should be weighed with this likely further liability in mind.

130    As to this last point, ASIC says that penalties serve the purpose of deterrence but costs orders serve the purpose of indemnification. The likelihood of a costs order (including one made by ASIC under s 91 of the Australian Securities and Investments Commission Act 2001 (Cth)) (ASIC Act) goes only to the assessment of RM Capital's financial position and whether a penalty will be oppressive. It also submits that if a wrongdoer's costs liability were to be in effect set off against the penalty, that could encourage them to 'roll the dice' by defending proceedings instead of compromising earlier so as to minimise costs.

131    I accept these submissions: see Laming at [20]-[26]. RM Capital sought to distinguish Laming and Limni on the basis that they concerned costs orders made by the courts, and orders made by ASIC under s 91 of the ASIC Act to provide for payment of its investigation costs are qualitatively different. While both have the purpose of indemnification, counsel for RM Capital submitted that in the case of a s 91 order, the person under investigation, as distinct from the person in litigation, has no capacity to influence whether or not the investigation continues. He submitted that the policy issue identified in Laming about the undesirability of encouraging contraveners to 'roll the dice' by defending the matter to the last does not apply in this situation because of the inability to influence the investigation.

132    I do not accept that any of this provides relevant points of distinction. True it is that the influence may be less direct than that held by a party to litigation, but in both cases the costs incurred can be reduced by the party cooperating in the process or coming to a sensible arrangement to resolve the matter. And as for the point about 'rolling the dice', if a court is considering the imposition of a penalty then by definition there has been litigation. Regardless of the character of the s 91 liability, it would be undesirable for the contravenor to think that its risk of a higher penalty if it defends the matter is mitigated because the penalty will be reduced by the amount of the s 91 liability that it has incurred anyway, so it has no incentive to truncate ASIC's investigation.

133    The fundamental point about the s 91 costs is that the legislature has seen fit to provide ASIC with a power to recover certain costs by way of indemnity, and that power is not to be confused with the power of the court to impose a penalty for the primary purpose of deterrence. I will take the likelihood of a s 91 costs order as relevant only in so far as it impacts on the financial position of the contravener as a factor relevant to penalty. In this case, while it can be safely assumed that the amount will not be trivial, there is no evidence of the likely amount of the costs order. That, together with the lack of persuasive evidence as to RM Capital's capacity to pay, means that there is no basis to give it weight as a separate factor here.

134    There is a further point I have taken into account, although it did not feature in the submissions by ASIC or RM Capital concerning the penalty to be imposed on that company. It features, rather, in the joint submissions made by ASIC and SMSF Club in relation to the penalty to be imposed on that company. As recorded at [151] below, they submit that the orders proposed under s 1101B of the Corporations Act requiring SMSF Club to have in place appropriate systems, policies and procedures and to provide ASIC with a written report of an independent expert will minimise the risk of further contraventions of s 963G(1). I accept that a compliance step of this kind will reduce the likelihood of further contravention. The same reasoning must apply to the risk that in future RM Capital will repeat its breach of s 963F. I take the proposed s 1101B order against RM Capital into account as a factor that reduces the need for specific deterrence.

Conclusion on penalty against RM Capital

135    For the reasons set out above, I have determined that RM Capital's contravention of s 963F of the Corporations Act during the relevant period was the result of gross negligence within the organisation as to whether it was complying with the obligations in that section. That equates to gross negligence as to whether its authorised representative, SMSF Club, was accepting conflicted remuneration in breach of s 963G.

136    While the contravention as found is specific to SMSF Club, it is the result of a lack of any meaningful steps directed at preventing the acceptance of conflicted remuneration more broadly. This in turn meant that RM Capital did very little to ensure that SMSF Club did not accept conflicted remuneration. What it did fell far short of the requirement in s 963F to take reasonable steps to ensure that this did not happen. That was in a context where RM Capital knew that SMSF Club was party to a referral fee arrangement with PRE which raised obvious concerns. This was the case for three years.

137    For these reasons I accept ASIC's submissions that RM Capital's breach of the law, while not at the highest level of seriousness, is comfortably higher than the midpoint of the spectrum. It was not dishonest or reckless, but it was the result of an extraordinary level of carelessness over an extended period of time. It was a failure to take seriously important legislation that is aimed at the protection of retail financial services clients. I place considerable weight on this conclusion in determining the appropriate penalty.

138    Another matter that attracts considerable weight is the lack of any meaningful culture of compliance at RM Capital. The conclusions just summarised make it inevitable that this was so during the relevant period. Although it is necessary to avoid any 'double counting' of the factors, or circularity of reasoning, the issues of the seriousness of the conduct and whether there was a culture of compliance are conceptually distinct. For reasons expressed above, it is a matter that attracts considerable weight, in particular because of the implications it has for specific and general deterrence.

139    That is especially so because I am not satisfied that RM Capital has developed a genuine culture of compliance since the relevant period. It has shown no remorse for its contravention. Its efforts to improve its compliance systems, while real, have been deficient. While I accept that its 'Managing Conflicted Remuneration' policy is a material improvement on what came before it, it remains unclear and wrongly describes the scope of the prohibition as confined to personal advice. There is no evidence as to when the policy was adopted in that form, but from the fact that the first version on which RM Capital relies is dated December 2022, I infer that it was not adopted until more than six years after the company was aware that ASIC was investigating. While, as noted, there is a differently worded 2018 policy in evidence, RM Capital placed no reliance on that iteration. Further, RM Capital adduced no evidence establishing that the post-December 2022 policy has been disseminated throughout its organisation, including its network of authorised representatives.

140    On top of this, a review of client files conducted in 2021 to 2023 revealed a concerning lack of understanding of the ban among RM Capital's authorised representatives, with no clear evidence that the company has taken any steps to correct that. There is limited evidence of any training, and what evidence there is suggests that, remarkably, the training has perpetuated the incorrect view that the ban on conflicted remuneration can be 'managed' by client consent or disclosure. Against this, there was evidence that RM Capital has taken the appropriate monitoring step of requiring representatives to complete quarterly declarations which cover conflicted remuneration. But overall, it is concerning that in the face of an ASIC investigation, a court finding of contravention, and a pending determination of civil penalty, RM Capital still does not seem to be taking its obligations seriously.

141    In RM Capital's favour is the lack of evidence that its conduct caused any loss, the lack of any previous contraventions on its part, and the fact that it will be subject to a remedial order under s 1101B requiring it to have in place appropriate systems, policies and procedures to ensure future compliance with s 963G.

142    Finally, RM Capital, while plainly not a large organisation, has not established that it lacks the financial resources necessary to pay a penalty in the order of the one that ASIC seeks. In any event, the serious concerns just summarised mean that general deterrence requires that a significant penalty be imposed.

143    For all those reasons, a penalty of $575,000 is appropriate.

THE RELIEF TO BE GRANTED AGAINST SMSF CLUB

144    ASIC and SMSF Club have reached agreement as to the making of an order by ASIC under s 91 of the ASIC Act for the costs of its investigation, in the sum of $270,000. This will be noted in the orders to be made. They have also agreed as to declarations of the contraventions found in the first section of this judgment, a pecuniary penalty, an order under s 1101B(1)(a)(i) of the Corporations Act, requiring SMSF Club to have appropriate systems, policies and procedures in place to ensure compliance with s 963G and providing for independent verification of that, and for no order as to the costs of the proceeding as between them. On the basis of the findings in the first section of this judgment, it is appropriate to make all these orders. It is only necessary to provide reasons in relation to the penalty.

Principles

145    The uncontentious principles as to penalty are set out in the previous section of this judgment concerning RM Capital. For the purpose of assessing the penalty against SMSF Club it is only necessary to add to those principles in two respects.

146    First, where the parties have agreed to the amount of the penalty which will be proposed to the Court:

Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and … highly desirable in practice for the court to accept the parties' proposal and therefore impose the proposed penalty.

Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 (FWBII) at [58] (French CJ, Kiefel, Bell, Nettle and Gordon JJ).

147    The question is whether the parties' proposal can be accepted as fixing an appropriate amount, and for that purpose the court must satisfy itself that the submitted penalty is appropriate: FWBII at [48]. Because fixing the quantum of a civil penalty is not an exact science, there is a permissible range, and the court will not depart from the figure submitted by the parties merely because it might otherwise have been disposed to select some other figure: FWBII at [47].

148    Second, the Court has found 52 contraventions by SMSF Club, compared to one for RM Capital. This engages what is sometimes called the course of conduct principle and also requires the Court to be conscious of the totality principle. The course of conduct principle recognises that where there is an interrelationship between the legal and factual elements of two or more contraventions, care must be taken to ensure that the defendant is not punished twice for what is essentially the same wrongdoing. This requires a fact specific inquiry aimed at careful identification of what is the same wrongdoing. See Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39 at [39], [41] (Middleton and Gordon JJ).

149    The totality principle requires a court which has decided it appropriate to order a series of penalties, each properly calculated in relation to the contravention for which it is imposed, to review the aggregate penalty and consider whether it is just and appropriate. If the total penalty is excessive, that may lead to the moderation of the penalty imposed in respect of each offence: Australian Building and Construction Commissioner v Construction, Forestry, Mining and Energy Union [2017] FCAFC 113; (2017) 254 FCR 68 at [118], [120].

Consideration

150    ASIC and SMSF Club submit that the agreed penalty of $350,000 in total is appropriate. They point out that this averages at approximately $6,731 per contravention. The matters they say support the imposition of that penalty are:

(a)    the contravening conduct occurred over a sustained period, from November 2014 to July 2016;

(b)    the conduct was systematic, in the sense that it occurred pursuant to the terms of the referral agreement;

(c)    to the extent that the referral agreement predated 1 July 2013 and thus fell into the transitional period provided for by the regulations, that grace period ceased to have effect on 1 July 2014, and yet SMSF Club did not terminate or amend the referral agreement from that time (as to the transitional arrangements, see First Judgment [66]-[67];

(d)    the contravening conduct involved the acceptance of a total of $135,863.65 (excl GST) in conflicted remuneration on 52 occasions;

(e)    the conduct occurred while there was publicly available information in relation to the prohibition on conflicted remuneration, including ASIC's regulatory guide RG 246: Conflicted and other banned remuneration; and

(f)    the contraventions involved SMSF Club's employees and its sole director, who provided advice to its Clients that could reasonably be regarded as intended to influence them in making a decision whether to establish an SMSF and whether to acquire property through it, that being a decision in relation to the financial product constituted by that interest in the SMSF.

151    ASIC and SMSF Club also point to the following mitigating factors:

(a)    SMSF Club was, at all material times, a single director, small proprietary company (this is agreed in the SMSF Club SOAF in as many words, so I take it to be a reference to how large SMSF Club is as a business rather than use of the term defined in s 45A(2) of the Corporations Act);

(b)    only when ASIC's regulatory guide was updated in December 2017 did it make explicit that financial product advice included advice to establish an SMSF to purchase real property;

(c)    no dishonesty on the part of SMSF Club or its officers is alleged;

(d)    no financial loss suffered by any client is alleged;

(e)    after ASIC notified its concerns in 2016, SMSF Club took immediate corrective action to cease the contravening conduct, by not accepting any further referral benefits and by terminating the referral agreement with PRE;

(f)    SMSF Club has ceased its association with PRE;

(g)    SMSF Club has shown a degree of cooperation with ASIC in agreeing to resolve the claims against it on an agreed basis;

(h)    these are the first contraventions of the Corporations Act that have been alleged against SMSF Club and ASIC has taken no other regulatory action against the company;

(i)    SMSF Club is no longer an authorised representative of RM Capital, and is operating under the AFSL of a different licensee; and

(j)    the proposed s 1101B orders will minimise the risk of further contraventions of s 963G.

152    These matters are said to place the conduct in the lower to middle range of seriousness.

153    ASIC and SMSF Club submit that the 52 contraventions were inherently connected because they all arose out of the referral agreement. Hence the course of conduct principle can be applied. But even if it is not, a penalty of $6,731 per contravention is sufficient to serve as a specific and general deterrent in this case. In terms of general deterrence, ASIC and SMSF Club point out that the penalty per contravention will be equal to approximately 2.6 times the average benefit received, that is, the referral fees accepted in each instance of conflicted remuneration. This makes it more than just an acceptable cost of doing business.

154    I accept these submissions. For the purpose of the exercise of the discretion to impose a penalty, it is appropriate to treat the contraventions together as a course of conduct. They are linked because they all arose out of the referral agreement with PRE. It was the continuation of that agreement past 1 July 2014 which constituted the contravening conduct.

155    By continuation I mean, not only not terminating the referral agreement (or amending it to remove the contravening element), but also the acts of giving advice where the existence of the agreement could reasonably be expected to influence SMSF Club's choice to recommend the formation of an SMSF to purchase property through PRE. It is the presence of the referral agreement, and the knowledge that a benefit would be obtained under it, which could have been expected to influence the financial product advice given by SMSF Club. Hence, it was that agreement that made the remuneration conflicted remuneration. It is necessary in my view to have regard to this in order to ensure that SMSF Club is not punished more than once for the same contravening conduct.

156    $350,000 is within the range of appropriate penalties that the Court would have imposed itself by reaching an instinctive synthesis, having due regard to the need for specific and general deterrence in the circumstances outlined above. The conduct was serious and sustained but the penalty is a significant amount for a small proprietary company and so achieves specific deterrence. On the other hand, SMSF Club's relatively quick action to remedy the position once concerns were raised, and its cooperation with ASIC to resolve the matter, are factors which militate against the need to impose a higher penalty in order to send a message to the business community about the consequences of non-compliance. And, importantly, it is significant enough not to be viewed as a cost of doing business, for the reasons that ASIC and SMSF Club give.

Conclusion

157    For those reasons, there will be orders in the terms agreed between ASIC and SMSF Club.

Parity

158    Finally, while no submissions have been directed to me on the subject, I have taken into account the need for parity between the penalties to be imposed on each of RM Capital and SMSF Club or, to put it another way, the need for any disparity to be supported by differences in the circumstances. This is a principle that can be relevant in civil penalty cases: see Pattinson at [45]. In the criminal context, it has been described this way:

The application of the parity principle is concerned with substance, rather than form. Offenders who are part of the same criminal enterprise may rely on the parity principle because there is a meaningful connection between their offending. Participation in the same criminal enterprise creates a reasonable expectation that the sentences imposed on participants will bear some proportionality to each other.

Akoum v The King [2023] WASCA 102 at [85] (Hall JA, in dissent but not on this point).

159    In this case, the two penalties are proportional to each other in view of the following matters:

(1)    The two defendants have, of course, breached different provisions. RM Capital has failed, over a three year period, to take reasonable steps to ensure that SMSF Club did not accept conflicted remuneration. SMSF Club has accepted conflicted remuneration over a little more than 1½ years. But since their respective contraventions were part of the same overall arrangement, it is appropriate to have regard to parity considerations.

(2)    Reflecting that difference is that the defendants each have a different place in the scheme of Pt 7.7A of the Corporations Act. As explained in the First Judgment, the scheme of the Act is to place on AFSL holders such as RM Capital the responsibility to choose and supervise their authorised representatives so as to minimise the chance that they will breach the provisions of that Part and others. That higher level of responsibility reflects a higher level of seriousness when breaches of s 963F occur as compared to breaches of s 963G (all other things being equal).

(3)    The gross negligence I have found in relation to RM Capital in the period of the contravention, and the inadequacy of its approach to compliance (and to establishing compliance) since then, are aggravating factors which are not present on the evidence concerning SMSF Club.

(4)    SMSF Club has cooperated with ASIC from an early stage and so shown contrition and saved public resources, while RM Capital has not.

160    With these differences in mind, I consider that the respective penalties I am ordering against each defendant are commensurate with each other. The application of the course of conduct principle explains why the difference in the number of contraventions in the case of each defendant points to no different conclusion.

Associate:

Dated:    18 December 2025