ASIC has imposed additional conditions on the Australian financial services licence (AFSL) of Total Financial Solutions Australia Limited (TFSA) (AFSL Number 224954).

In October 2014, ASIC commenced a surveillance focusing on financial product advice provided by one of TFSA's authorised representatives. ASIC's surveillance identified serious concerns including:

• A 'one size fits all' approach when providing superannuation rollover advice

• Systemic failure to act in the client's best interests, especially in instances where the advice related to a client's existing defined benefit superannuation funds

• Failure to prioritise the client's interests when providing advice.

The licence conditions were sought after ASIC also identified concerns about the steps taken by TFSA to comply with financial services laws, in particular its monitoring and supervision of the relevant authorised representative.

ASIC Deputy Chair Peter Kell said, 'Adequate supervisory arrangements must be in place to ensure advisers are providing advice that is in the best interests of their clients. We know that deficiencies in licensee guidance and supervision can lead to systemic misconduct by advisers.'

TFSA has consented to the licence conditions, agreeing to appoint an ASIC approved compliance expert for a period of 18 months. The expert will supervise TFSA in reviewing the advice that raised concerns in the ASIC surveillance and will provide findings to both ASIC and TFSA. TFSA and the expert will implement and oversee a client remediation program for affected clients.

The expert will also conduct a review of the adequacy and effectiveness of its licensee compliance arrangements. As part of this condition, the expert will conduct an analysis of TFSA's compliance arrangements, focusing on the adequacy of its monitoring and supervision of its representatives and its dispute resolution procedures.

ASIC acknowledges the cooperation of TFSA to date in taking steps to acknowledge ASIC's concerns and working with ASIC towards an agreed and client-focused outcome in this matter.

ASIC's surveillance activity continues regarding the conduct of the individual authorised representative.

Background

TFSA is a wholly owned subsidiary of Countplus Limited, a publicly listed company on the ASX. Count Financial, which is owned by the Commonwealth Bank of Australia, is the largest single shareholder of Countplus.

This surveillance formed part of the specialist Wealth Management Project, set up by ASIC in October 2014 (refer: Senate Estimates: Opening statement - February 2015).

Since ASIC’s Wealth Management Project started in October 2014, ASIC has banned the following advisers from the financial services industry:

Martin Hodgetts (refer: 15-218MR)
Shawn Hickman (refer: 15-213MR)
Brett O'Malley (refer: 15-121MR)
Brian Farber (refer: 15-178MR)
Rebecca Locksley (refer: 15-070MR)

ASIC has identified client remediation as a critical obligation for an Australian Financial Services Licence holder when instances of misconduct have occurred. (refer: 15-101MR)