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16-145MR ASIC accepts enforceable undertaking from HSBC Bank Australia following concerns about deficient advice on retail structured products
ASIC has accepted an enforceable undertaking (EU) from HSBC Bank Australia Ltd (HSBC) that requires HSBC to review and remediate clients who received potentially deficient advice on retail structured products between January 2009 and March 2013.
The EU follows a proactive ASIC surveillance of HSBC's advice on retail structured products which found instances where advisers had obtained little or no information about clients' relevant personal circumstances and raised concerns that advice may not have been appropriate for the clients' circumstances or needs (refer: 15-036MR).
As a result, ASIC was concerned that HSBC may have failed to comply with certain obligations under the Corporations Act and HSBC's Australian financial services licence.
HSBC subsequently reviewed all of its advice on structured products and lodged a breach notification with ASIC, reporting potential deficiencies in the advice provided to approximately 464 of the 557 clients reviewed.
Under the EU, HSBC is required to:
- develop and implement a remediation plan to ensure that affected clients are reviewed and remediated in an efficient, honest and fair manner;
- develop and implement an assessment plan to determine whether the problems identified in the advice on structured products extend to clients who were advised to invest in other types of products between January 2009 and March 2013, and if so, to ensure those other affected clients are also fairly remediated; and
- appoint an independent expert to report to ASIC on the adequacy of HSBC's review and remediation program.
ASIC Deputy Chairman Peter Kell said, 'One of the fundamental obligations of financial advisers is to ensure that financial products are appropriate for the consumers' needs and circumstances. Where that doesn't occur, ASIC will intervene to ensure that affected clients are reviewed and compensated fairly and consistently.
'Clients affected by the breach will have an opportunity to have their advice reviewed, and where instances of poor advice that led to financial loss are identified, to receive compensation. The independent expert will assess the adequacy of the remediation program, HSBC's compliance with the EU, and will report its findings to ASIC', Mr Kell said.