ASIC has announced that it has imposed additional Australian Financial Services licence conditions on an SMSF adviser firm, following surveillance.
SMSF Advisers Network Pty Ltd (SAN) has had conditions imposed on its licence following “surveillance which ASIC commenced because of a significant increase in adviser numbers at SAN in a relatively short period of time,” ASIC said.
“As part of the surveillance, ASIC reviewed a number of SAN’s client files. This review identified concerns including that some of SAN’s advisers had failed to demonstrate compliance with the best interest duty and related obligations. ASIC found that the statement of advice (SOA) documents relied heavily on templated wording and many of the client files lacked evidence to support the advisers’ recommendations that clients establish a SMSF.”
“As a result, ASIC was concerned that SAN had inadequate supervision processes in place to ensure that advice provided by its representatives was in the best interests of clients.”
“The licence conditions were imposed by consent as a result of SAN’s engagement in addressing the concerns identified during the ASIC surveillance. “
Under the additional licence conditions SMSF Advisers Network will need to engage an independent expert to review and test the compliance of its advice, and assess if there are appropriate supervision mechanisms to ensure its advisers are meeting the best interest duty.
“AFS licensees are responsible for the conduct of their representatives. ASIC expects licensees to have adequate supervision arrangements in place to ensure that their representatives comply with the law when providing financial product advice to consumers,” said ASIC.
“It is essential that AFS licensees’ resources remain adequate, especially during periods of strong growth, to ensure compliance with their obligations.”
“ASIC will continue to monitor movements in adviser numbers when targeting future surveillance work.”
“When providing SMSF advice, financial advisers are required to adequately demonstrate why an SMSF is appropriate for the client and why it is in the client’s best interests. ASIC expects financial advisers to use their skills, expertise and judgement in determining whether an SMSF is appropriate and not rely solely on client direction.”