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11-243MR ASIC imposes licence conditions on Australian Financial Services Limited
ASIC has imposed additional licence conditions on Australian Financial Services Limited (AFS) following a six month surveillance.
The surveillance included a review of client files to examine the appropriateness of advice given and looked at the management of conflicts of interest and complaints handling.
ASIC Chairman Greg Medcraft said investors must be able to confidently rely on the accuracy and appropriateness of information provided by financial advisers.
‘All Australian financial services licensees are gatekeepers and are expected to properly manage and supervise their representatives and employees and make sure conflicts of interest are managed or avoided and client complaints are dealt with promptly,’ Mr Medcraft said.
ASIC’s surveillance identified the following concerns:
(a) the management of conflicts of interest relating to advice provided to clients to switch their investments to financial products associated with and/or related to the licensee;
(b) meeting the requirements of a compliant dispute resolution system;
(c) the monitoring and supervision of staff and representatives;
(d) compliance with the requirements of s945A of Corporations Act 2001 (the Act) - the requirement to have a reasonable basis for advice provided to clients; and
(e) compliance with s947D of the Act - the requirements when advice recommends replacement of one financial product with another.
As part of the additional licence conditions, AFS has agreed to engage an independent expert to review and make recommendations regarding its compliance practices, processes and resources. This review will also involve the compliance expert reviewing advice provided to AFS clients to determine whether the advice was appropriate to the circumstances of the clients and, where relevant, provide a recommendation regarding appropriate remediation or compensation.
ASIC acknowledges AFS’s cooperation in voluntarily offering to engage an independent expert and their commitment to improving compliance with its licence conditions.