Digraced former adviser escapes prison time

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ASIC has just announced that former Sydney financial adviser, Randwick-based Ms Susan Heathwood, has been sentenced to nineteen months imprisonment and twenty two months imprisonment respectively after pleading guilty to two charges brought by ASIC.

However, the two prison sentences have been wholly suspended after Heathwood agreed to enter into a two-year good behaviour bond of $1,000.

Heathwood's cooperation with ASIC investigators and her early guilty plea also contributed to the Downing Centre District Court’s decision to suspend the sentences. She had pleaded guilty on 26 June 2012 to two counts of dishonest conduct in relation to financial services.

ASIC’s investigation found that between August 2009 and May 2011, Ms Heathwood – who was an authorised representative of GuardianFP and an employee of Jalee Consulting Group Pty Ltd – falsified 65 insurance applications that led to her collecting over $380,000 in commissions.

The names appearing on the false applications were mostly Heathwood’s current or former clients, whose personal details were changed so they could not be identified.

These clients had never requested for insurance to be arranged on their behalf, yet Heathwood used their intimate details – such as smoker status, height, weight, the number of alcoholic drinks they consumed per week and occupation – on the fake applications.

Heathwood deflected attention away from her clients by redirecting any mail to her personal PO box, and using either her or her children's telephone number as a point of contact in the applications.

She received $380,897 in commissions from policies associated with the false insurance applications. The insurance companies managed to reclaim $326,207 in the form of writebacks

According to ASIC’s case, Heathwood made $49,275 in premium payments for a number of the policies in an attempt to hide her conduct.

She could have recieved a maximum penalty of imprisonment for five years, a $22,000 fine, or both, for her first offence. The second offence could have seen her jailed for 10 years, face a $450,000 fine, or both.

She was permanently banned from providing financial services earlier this year in March.

More stories:

The $380,000 fraud: financial adviser pleads guilty to dishonest conduct

Shonky planner banished for life

  • Glenn Wheatley on 15/11/2012 12:24:22 PM

    what the hell, i defauded the tax payers and got two years !! My fraud was $310K. Perhaps if Fairwork australia had investigated Susan, she might have been able to work for another 5 years selling Tombstones.

  • Leanne on 13/11/2012 10:32:41 AM

    All the red tape in the world only frustrates the honest and leaves the dishonest to continue to do whatever they like with very little consequences.
    Wouldn't it be more effective if the focus was on decreasing the regulation and increasing the consequences for those that act in a dishonest way? A two-year good behaviour bond of $1,000 is definitely not enough punishment for the disrepute she has brought to our profession.

  • Stephen on 12/11/2012 3:17:41 PM

    In my property law studies, I was appalled at the number of solicitors and banks who did the wrong things by their clients. Financial institutions in particular have been known to turn a blind eye to various inaccuracies because they want to get the business. So based on that, do the insurance companies make it easy for people like this because they want the sale so badly they don't pay the necessary attention to what is going on.

  • Bruce on 12/11/2012 2:55:02 PM

    Poor Susan its not her fault, maybe she was just trying to do the best for her clients who did'nt realise they needed more insurance !!

  • Stephen Varhegyi on 12/11/2012 2:44:53 PM

    In this instance the culprit wasn't ripping off clients, she was defrauding the insurance companies of their commissions. Most of which they were able to recoup. That's probably why the court let her off with a light penalty. However this raises an interesting point. Does fiduciary interest extend to insurance product providers? The dictionary states as follows "from the Latin fiducia, meaning "trust," a person (or a business like a bank or stock brokerage) who has the power and obligation to act for another (often called the beneficiary) under circumstances which require total trust, good faith and honesty." So I guess the underwriters placed their trust in the adviser to do the right thing in delivering services and receiving commissions for the placement of business. I think this would therefore breach the fiduciary duty the agent had to the underwriter in providing their products for sale.

  • Michael Summers on 12/11/2012 2:37:29 PM

    The community will never take the advisory community and its regulators seriously as long as people like this get away with a slap on the wrist. She should be named, shamed and sent away to do some hard time. It's a joke. Would I be a misogynist to suggest that her lenient treatment was influenced by her gender ? I wonder.

  • Andrew on 12/11/2012 2:36:33 PM

    Interesting sentence. 19-22 mths prison served concurrently suspended based on $1000 two year good behaviour bond that has been financed by the fraudulent commissions that have not been recouped. Am I reading this correctly ?

  • Stephen on 12/11/2012 2:19:09 PM

    There are so many loopholes to fiduciary duties that you can never expect 100% compliance. Unfortunately, this behaviour just highlights the general publics view of financial planners. How is that we never see any good news stories regarding planners?

  • Merv Gay on 12/11/2012 2:08:09 PM

    Well this is all Bill Shorten's fault. If he had introduced his form earlier, that we all have to sign that we'll act in our clients' best interests, then Ms Heathwood would not have acted in the way she did......would she?

  • Martin on 12/11/2012 2:16:52 PM

    his is possibly the dumbest crook I have heard off.. She is a danger to herself!

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