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Thursday 18 January 2018

18-014MR Enforceable undertaking places Queensland financial adviser under supervision for 12 months

The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking (EU) from Duane Wright and his business, First National Home Loans and Insurance Pty Ltd (First National), after he failed to meet his obligations in providing life insurance replacement advice.

ASIC found Mr Wright had:

  • failed to undertake adequate inquiries into the relevant personal circumstances of some  clients to whom he made recommendations to switch life insurance policies
  • failed to provide adequate replacement product advice in the Statement of Advice, preventing the client from making an informed decision to switch life insurance and superannuation products
  • advised purchasing life insurance that was too expensive for the client
  • failed to consider the longer term impact on retirement savings of placing life insurances within superannuation, and
  • failed to provide accurate information about the clients' circumstances within the Statement of Advice.

Under the EU, Mr Wright and First National have agreed to undergo additional training in relation to the provision of financial product advice and must adhere to strict supervision requirements for 12 months, with all their advice audited by the authorising licensee before it is provided to clients.

Background

This outcome is a result of ASIC's Life Insurance Lapse Data Project (LILD Project). The LILD Project was established in August 2016 to make greater use of data to focus ASIC's surveillance of life insurance advice, with the ultimate aim of improving the life insurance advice provided to Australian consumers.

Under the LILD Project ASIC receives reports from life insurers that list the names of advisers who meet specific thresholds relating to lapsed policies. ASIC analyses these reports and other data to identify a group of high risk advisers.

The resulting 'high risk list' is not in itself an assessment of poor quality advice. The 'high risk list' enables ASIC to target its surveillance activity. ASIC then reviews the quality of advice provided by advisers on the high risk list to determine whether the advisers are acting in their clients' best interests. 

ASIC's surveillance of Mr Wright looked at a number of his client files from GuardianFP Ltd, where he was an authorised representative from July 2012 to April 2016.

Mr Wright is a current representative of Alliance Wealth Pty Ltd.

Last updated: 18/01/2018 03:08