Former Power Loan director banned from providing financial services for five years

Friday 18 April 2008

The Australian Securities and Investments Commission (ASIC) has banned Mr Stephen McArdle, formerly of Adelaide, from providing financial services for five years.

Mr McArdle, 35, was a director of a number of companies operating under the Power Loan banner, including Power Financial Planning Pty Ltd (Power FP), Power Franchise Pty Ltd and National Finance and Trading Group Pty Ltd, which is the proprietor of the Power Loan business name.

Franchisees and contracted finance consultants of Power Loan promoted the ‘Power Equity Loan’ across Australia. Potential clients were advised that if they took out a Power Equity Loan secured by a mortgage over their home, they could invest the proceeds of the loan in an investment product that earned more interest than that payable on the loan, generating income that could be used to pay off their home loan quicker and save interest.

From November 2004, Mr McArdle negotiated agreements on behalf of Power FP with Kebbel Securities Limited, a wholly owned subsidiary and authorised representative of an Australian financial services licensee, Kebbel Funds Management Limited (Kebbel), and with Kebbel Victoria Pty Ltd to enable Power FP to earn commissions on investments made by clients in various financial products promoted by Kebbel including Westpoint investments in Emu Brewery Mezzanine and Mount Street Promissory Notes.

Power Loan clients invested over $10 million for which Power FP received a three per cent commission amounting to over $310,000.

Mr McArdle and Power Financial Planning Pty Ltd did not hold Australian financial services licenses during the period which was the subject of ASIC’s investigation.

ASIC found that Mr McArdle contravened the Corporations Act in that he:
was involved in the development and promotion of the Power Equity Loan strategy;
negotiated the referral arrangement and dealt with Kebbel;
directed service manager franchisees to refer clients interested in a Power Equity Loan to senior franchisees;
appointed the senior franchisees to provide information about investment products;
provided the senior franchisees with training and information about the Kebbel products; and
was the person nominated as the adviser for payment of commissions.

Mr McArdle has the right to lodge an application with the Administrative Appeals Tribunal for a review of ASIC’s decision.

Background
Numerous banning briefs in relation to financial advisers who advised on Westpoint products are currently under consideration. Ten licensed financial advisers and two unlicensed advisers who advised on Westpoint products have now been banned.

End of release