Since the March edition of the newsletter there has been a spate of seven decisions from the Financial Services and Credit Panel. Four involved fees for no service and two involved insurance issues in super rollovers. The sanctions included reprimands and directions to undertake additional CPD.
The most serious decision involved the provision of inappropriate advice to establish a self-managed superfund, make non concessional contributions to the self-managed superfund and make investments in certain unregistered managed investment schemes for wholesale investors.
The sitting panel believed that the financial adviser contravened sections 961B(1) (Best Interests Duty) and 961G (appropriate advice) of the Corporations Act as they did not advise the client to make concessional contributions that were available, the wholesale funds were not appropriate given the client’s circumstances and a self-managed superfund was not appropriate given the client’s circumstances and the higher fees involved.
The panel also considered the adviser contravened section 961E (what would reasonably be regarded as in the best interests of the client) by failing to comply with Standard 5 (recommendations are appropriate to a client’s individual circumstances) of the Code of Ethics.
The panel directed the adviser, at their own expense, to engage an independent compliance expert to audit 10 pieces of retail client advice prior to the advice being provided. Once the audits had been completed the expert was to provide a compliance report to ASIC outlining the adviser’s compliance as well as any recommendations to improve future compliance with financial services laws and their licensee’s requirements.
The link to the Financial Services and Credit Panel outcomes register is here.
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