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14-183MR ASIC accepts enforceable undertaking from Adelaide-based AFS licensee
ASIC has accepted an enforceable undertaking (EU) from Adelaide-based PGW Financial Services Pty Ltd (PGW), after an ASIC surveillance found deficiencies in its advice to clients and arrangements for supervising its authorised representatives.
ASIC's surveillance followed PGW's appointment of a number of ex-representatives of AAA Financial Intelligence Limited (AAA FI) and AAA Shares Pty Ltd (AAA Shares) after their Australian financial services (AFS) licences were cancelled by ASIC in February 2013.
ASIC identified numerous instances where financial product advice provided by PGW to clients did not demonstrate:
- a reasonable basis for the recommendations made, and
- compliance with disclosure obligations applying to advice on switching financial products.
ASIC also had concerns regarding the alleged failure of PGW to maintain adequate:
- human and technological resources, and
- records of financial services provided to clients.
Regarding the supervision of its authorised representatives, ASIC was concerned that PGW failed to:
- assess the competency of representatives before their appointment
- ensure the adequate training of representatives, and
- respond to failures identified during the licensee's audit process.
Deputy Chairman Peter Kell said, 'Licensees must ensure they have appropriate resources and procedures in place when providing financial services to retail clients. These arrangements should be reviewed when licensees rapidly increase their numbers of representatives, particularly where those representatives have come from other licensees.
'Licensees need to assess the competency of representatives at the time of appointing them and put in place rigorous checks to ensure financial services provided by them are of the expected standard.
'We would expect licensees who take on representatives previously authorised under licensees that have been the subject of ASIC action to be especially prudent, recognising they may have been exposed to a less robust or non-compliant supervisory environment', Mr Kell said.
In response to ASIC's concerns, PGW has agreed to implement a regime of supervision, review and audit, by an ASIC-approved compliance expert for a period of at least 15 months. This will incorporate the implementation and review of any remedial action plans that are developed to resolve any deficiencies identified by the compliance expert.
ASIC acknowledges PGW's cooperation and constructive engagement throughout the process.
ASIC cancelled the AFS licences of AAA FI and AAA Shares in February 2013 (refer: 13-019MR).
ASIC has previously warned the market about the need to ensure they have robust recruitment processes, especially when appointing representatives who have worked for a business against which ASIC has taken action (refer: 13-097MR).