ASIC bans two NextGen directors
ASIC has banned two former directors of NextGen Financial Group, Nicholas Brookes and Vitorio Turco, for failing to pay several AFCA determinations dating back to 2022. The pair have been slapped with a three-year ban each from controlling or being involved in the management of a financial services business.
Back in 2022, AFCA determined that NextGen should pay around $270,000 to an SMSF trustee who received advice to purchase an investment property through their fund. The firm had set aside $175,000 for the purchase, nearly all of which was invested in a loan fund with a one-year term. That fund subsequently collapsed, preventing the trustee from settling on the property.
NextGen didn’t respond to AFCA’s decision, and the trustee ended up issuing a statutory demand for the unpaid determination. In court, the advice firm argued that an AFCA determination couldn’t be enforced via statutory demand and that the trustee would need to secure a court order before any legally-recognised debt was owed.
The court dismissed NextGen’s argument, which allowed the trustee to initiate wind-up proceedings. NextGen is now in liquidation and its AFSL was cancelled in 2024.
Compensation and fallout
In its banning orders for Brookes and Turco, ASIC alleged that both were “linked to NextGen’s refusal or failure to give effect to at least two [AFCA] determinations,” including this one.
Given that the firm never paid these determinations, all NextGen complaints ended up in the Compensation Scheme of Last Resort. The above SMSF was paid $150,000 by the CSLR, although one of the trustees, Vicki Alexopoulos, said $30,000 of that amount went to legal and financial advice fees.
“We are out quite substantially from what AFCA and the Federal Court ordered NextGen to pay us, and we are out even more substantially if our initial investment had not been tampered with and our purchase was able to happen,” Alexopoulos said.
She added: “Ultimately, ASIC could have helped us long before, however chose not to, costing us a great deal of money – to add insult to injury – which had to be paid from our compensation amount.”
For trustees and investors relying on advice firms to settle disputes, the collapse of a provider creates a cascading financial burden. Once a company enters liquidation, the regulator’s enforcement tools are often exhausted, leaving affected parties to shoulder the costs of litigation and the administration of their own claims. This process can drain resources intended for investment recovery, as seen in this case where legal fees consumed a significant portion of the final payout.
Brookes and Turco were specifically named in the orders for failing to ensure the firm complied with the determinations. The regulator noted that the directors knew about the outstanding debts but did not take steps to pay them or seek legal advice to address the statutory demand.
The outcome highlights a gap in how enforcement actions target individual accountability when corporate structures fail. While the AFSL cancellation dealt with the entity, the bans target the people responsible for the governance failures. This approach aims to prevent former directors from moving to new roles in the industry without facing consequences for past inaction.
Trustees who have lost money due to such failures must often handle a complex path to recover funds. The involvement of external bodies like the Compensation Scheme adds another layer of bureaucracy to the process. AI Education Must Turn Knowledge Into Capability shows the importance of understanding how financial advice is delivered and the mechanisms available for recourse when things go wrong.
