COMPLIANCE MATTERS: NOVEMBER 2018

/COMPLIANCE MATTERS: NOVEMBER 2018
COMPLIANCE MATTERS: NOVEMBER 20182018-11-05T16:29:46+00:00

AUSTPLAN LOSES ITS AFSL

ASIC has cancelled Austplan’s AFSL, which will take effect from 25 November 2018.

The cancellation is a result of Austplan being unable to ensure its representatives comply with Austplan’s licence obligations. In particular, Austplan representatives had been advising clients to establish selfmanaged superannuation funds (SMSF) when it was not in the client’s best interests to do so.

ASIC TO REVIEW FDS AND RENEWAL NOTICE COMPLIANCE

ASIC has announced its plan to conduct a review of compliance with requirements for Fee Disclosure Statements and Renewal Notices in the financial advice sector.

ASIC will undertake an industry-wide review to test compliance with FDS and Renewal Notice obligations. In particular, ASIC will investigate whether:

  • The documents are being issued and issued on time.
  • The documents include the necessary and accurate content.
  • That licensees have procedures in place to ensure fees for ongoing services are discontinued when the FDS or Renewal Notice obligations are not complied with.

FINANCIAL ADVISER BANNED FOR BREACH OF BEST INTEREST OBLIGATIONS

ASIC has banned a financial adviser from Spectrum Wealth, Mr Mehra, from providing financial services for three years for not acting in clients’ best interests in relation to life insurance advice.  In particular, ASIC alleged that Mr Mehra failed to:

  • Make reasonable enquiries into clients’ relevant circumstances investigate existing financial products before recommending new products.
  • Compare the features and cost of clients’ existing insurance with the new insurance recommended.
  • Base all judgments in relation to his advice on clients’ relevant circumstances.

TIP: ASIC is taking an interest in life insurance advice, and product-swap recommendations. If advisers are recommending that clients swap products, always ensure that advisers consider and explain both products – not just the new product – and that they document this process in their file notes and in the Statement of Advice.