ASIC has accepted new, separate enforceable undertakings (EU) from Wealthsure Pty Ltd (WPL) and Wealthsure Financial Services Pty Ltd (WFS) to replace a joint EU first accepted in August 2013.
WPL and WFS (Wealthsure Group) were related companies, both authorised under their respective Australian financial service licences to offer financial advice. WPL was also authorised under its Australian credit licence to engage in credit activity.
The new EUs respond to a restructuring of the Wealthsure Group and each company's new business activities.
ASIC commenced an investigation into the Wealthsure Group in December 2011 which identified recurring compliance failures. In August 2013, ASIC accepted an EU from the Wealthsure Group (the Wealthsure Group EU) which required it to complete a program to address its failure to foster and maintain a proper commitment to its compliance obligations. The Wealthsure Group was required to restructure its board to provide new oversight of this reform and have their work reviewed by an independent expert (refer: 13-240MR for more information).
The Wealthsure Group has made significant progress towards addressing ASICs concerns, introducing new personnel, procedures and systems. While ASIC is satisfied with the Wealthsure Group's remediation progress, we have taken the view that the earlier undertakings would best be fulfilled by WPL and WFS having separate EUs.
Wealthsure Group restructure
The Wealthsure Group's restructure involved Sentry Group Advice Pty Ltd (Sentry) acquiring WFS. Sentry Group Pty Ltd issued share capital to WPL shareholders as consideration for Sentry acquiring all of WFS's issued share capital. Sentry is wholly owned by Sentry Group Pty Ltd.
As part of the deal, WPL transferred most of its authorised representatives to WFS. WPL will cease to provide all financial services and request its Australian Financial Services (AFS) Licence be cancelled.
The Wealthsure Group and Sentry have worked with ASIC to ensure that the remediation plan formed under the Wealthsure Group EU is fulfilled by including like requirements in the new WFS EU.
The WPL EU contains new terms to maintain financial and human capabilities for receiving and responding to client complaints.
New WFS EU
The new WFS EU contains similar terms to the Wealthsure Group EU. WFS will be required to continue implementing its remediation plan, designed with the assistance of a compliance consultant under the Wealthsure Group EU. The implementation of the remediation plan will continue to be overseen by an independent expert, Deloittes, and regular reporting will be made to ASIC until October 2018.
To ensure that Wealthsure Group's advisers and clients continue to benefit from the remediation work being undertaken by WFS, ASIC has accepted WFS's offer to transfer no more than seven authorised representatives to Sentry per year without ASIC's consent.
New WPL EU
WPL has transferred most of its authorised representatives to WFS and will cease to provide financial services following WPL's and request that ASIC cancel its AFS Licence. Consequently WPL will no longer be required to complete the implementation of the remediation plan, designed under the Wealthsure Group EU. However, recognising that WPL may still have unresolved and unrealised complaints, ASIC has formalised WPL's undertaking to:
- engage an independent compliance consultant to manage its internal dispute resolution system
- maintain membership of an external dispute resolution scheme
- maintain professional indemnity insurance
- maintain capital
- notify all clients with an unresolved complaint about the changes.
The new WFS and WPL EUs will apply for the same period as the replaced Wealthsure Group EU, until October 2018, except for the requirement that WPL maintain professional indemnity insurance for seven years from the date of the new EU.