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Wednesday 21 May 2014

14-109MR ASIC concerns prompt Sentry Financial Services to undertake a review of SMSF advice

Australian financial services (AFS) licence holder, Sentry Financial Services Pty Ltd (Sentry) has agreed to address concerns raised by ASIC about self-managed superannuation fund (SMSF) advice provided to clients by its corporate authorised representative, Connect Financial Services Pty Ltd (Connect) (ACN 134 729 347).

ASIC’s surveillance of Sentry identified concerns surrounding SMSF advice provided to clients by Connect that may not have complied with, including:

  • the requirement for a Statement of Advice to be given to the client

  • the requirement to act in the best interests of the client and provide appropriate advice, and

  • the product replacement disclosure requirements when recommending the replacement of one financial product with another.

Further, ASIC was concerned that Sentry may not have complied with its obligations as an AFS licensee to properly monitor and supervise Connect and ensure Connect was adequately trained and competent to provide SMSF advice.

In response, Sentry has agreed to:

  • write to 158 clients that received an SMSF promotional letter from Connect to inform the clients that the letter contained personal financial advice and to offer the clients a review so that any necessary remedial action can be undertaken, and

  • engage an independent expert to review 17 client files of Connect that involved the establishment of an SMSF and make recommendations regarding any deficiencies identified and, where relevant, recommend remediation and/or compensation for the client.

The independent expert will report to ASIC and Sentry to ensure ASIC's concerns are addressed.

ASIC Senior Executive Leader, Louise Macaulay, said, ‘Establishing an SMSF is one of the most significant steps an investor can take in relation to their retirement savings. It involves taking greater personal responsibility for retirement investments. Those advising on SMSFs should be offering personal financial advice which considers the consumer's individual circumstances and makes sure the advice adequately meets their needs.

'AFS licensees are responsible for the conduct of their representatives in this regard and must be held accountable for any compliance failures.'

Sentry has cooperated fully with ASIC's inquiries and ASIC acknowledges the constructive action taken by Sentry to address its concerns.

Background

ASIC has had a strong focus on the SMSF sector in recent years.

In April 2013, we released Report 337 SMSFs: Improving the quality of advice given to investors (REP 337), which summarised the findings of reviews undertaken by ASIC on SMSF advice (refer: 13-081MR).

In September 2013, we released Consultation Paper 216 Advice on self-managed superannuation funds: Specific disclosure requirements and SMSF costs (CP 216), which contained our proposed guidance to improve the quality of advice given to investors.

Last updated: 21/05/2014 12:00