21/09/2023

Mr T

N/A

Warning issued under s921T(1)(b) of the Corporations Act 2001

The Sitting Panel has given a written warning to the relevant provider having found that the relevant provider contravened s946A, s947D(2)(a)(iii) and s921E(3) of the Corporations Act 2001. The relevant provider failed to include advice given to the client about using the downsizer rule in a Statement of Advice in February 2022, and in doing so failed to demonstrate the Code of Ethics’ Value of diligence. The Sitting Panel also found that the relevant provider contravened s947D(2)(a)(iii) of the Corporations Act 2001 in relation to switching advice given in the SOA in February 2022, and in an SOA given to another client in March 2022.

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12/09/2023

Mr V

N/A

N/A

The Sitting Panel has decided not to take any action against the relevant provider.

The relevant provider was authorised by a superannuation fund to give advice to fund members about the fund, and gave advice to two fund members in their 60s who wanted to improve their superannuation balances by increasing their voluntary contributions and updating their investment strategy from balanced to aggressive. The matter was referred to the Sitting Panel due to concerns that the relevant provider contravened s961B(1) of the Corporations Act 2001 by failing to identify that the clients required retirement planning advice, by failing to make reasonable enquiries about their cashflow, and by failing to determine whether an aggressive investment strategy was appropriate. As a result, it appeared that the advice was not appropriate in contravention of s961G of the Corporations Act 2001.

While the Sitting Panel considers the relevant provider could have done more in some areas, it did not believe the failures warranted action such as a warning or reprimand.

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08/09/2023

Ms D

N/A

Instrument issued under s921L(1)(a)(iii) of the Corporations Act 2001

The relevant provider contravened s961B(1), s961G and s921E(3) of the Corporations Act 2001 in relation to cashflow, superannuation and insurance advice given to a client in an SOA. The relevant provider also contravened s961B(1), s961G, s1041E(1) and s921E(3) of the Corporations Act 2001 in relation to cashflow, investment, superannuation and insurance advice given to another client in an SOA. 

In the first SOA, the relevant provider failed to identify that the client sought debt recycling and estate planning advice, and failed to make reasonable enquiries to obtain complete and accurate information about the client’s business and an existing investment. As a result, the advice was not appropriate, and the relevant provider breached Standard 2 of the Code of Ethics and did not demonstrate the Value of competence. In the second SOA, the relevant provider failed to correctly identify the client’s risk profile, and recommended that the client switch an investment in an existing product to a new product on the basis of a false or misleading statement about the existing product. As a result, the advice was not appropriate, and the relevant provider breached Standard 2 and Standard 9 of the Code of Ethics and did not demonstrate the Value of competence.

As a consequence of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) of the Corporations Act 2001 that the relevant provider receive specified supervision, being that the relevant person engage an independent person with expertise in financial services laws compliance to pre-vet the next 10 SOAs the relevant provider intends to present to a retail client. The relevant provider is required to provide the independent person’s findings as a result of their audits to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.

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07/09/2023

Mr E

N/A

Reprimand issued under s921T(1) of the Corporations Act 2001

The relevant provider contravened s911B(1) of the Corporations Act 2001 by giving a Statement of Advice to a client which included an insurance recommendation when the relevant provider was not authorised to give insurance advice. By making the insurance recommendation, the relevant provider also contravened 921E(3) of the Corporations Act 2001 because: the relevant provider failed to comply with Standard 4 of the Code of Ethics because the client did not consent to receiving insurance advice; the relevant provider failed to comply with Standard 9 of the Code of Ethics because they were not competent or authorised to give insurance advice; and the relevant provider failed to comply with Standard 12 of the Code of Ethics because they were not competent or authorised to give insurance advice, the client did not consent to receiving insurance advice and the relevant provider’s branch manager had queried why the insurance recommendation had been made before the relevant provider gave the Statement of Advice the client.

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31/08/2023

Mr H

N/A

Instrument issued under s921L(1)(a)(iii) of the Corporations Act 2001

The Sitting Panel found the relevant provider contravened sections 946B(3A), 961B(1) and 921E(3) of the Corporations Act 2001 and regulation 7.7.09 of the Corporations Regulation 2001. The relevant provider failed to keep adequate records of advice in relation to further advice given to three clients in contravention of s946B(3A) and regulation 7.7.09. The Sitting Panel found that the further advice given to the three clients was personal advice and it was inappropriate that it was given in general advice letters. The relevant provider did not act in the best interests of the clients as required by s961B(1) as the relevant provider had not kept adequate records e.g. to reference the research that formed the basis of the recommendations or advice, such that the relevant provider could not prove that they had performed all the actions specified in s961B(2) e.g. conducted a reasonable assessment of the financial product recommended. Consequently, the Sitting Panel found that the relevant provider failed to demonstrate the Code of Ethics’ Values of competence and diligence, and breached its Standards 5 and 8, thereby contravening s921E(3). As a result of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) that the relevant provider receive specified supervision, being that the relevant provider engage an independent person with expertise in financial services laws compliance to pre-vet and audit the next 10 pieces of advice that the relevant provider intends to present to a retail client. The relevant provider is required to provide the independent person’s findings as a result of their audit to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.

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31/08/2023

Mr O

N/A

Instrument issued under s921L(1)(a)(iii) of the Corporations Act 2001

The Sitting Panel found the relevant provider contravened sections 946B(3A), 961B(1) and 921E(3) of the Corporations Act 2001 and regulation 7.7.09 of the Corporations Regulation 2001. The relevant provider failed to keep adequate records of advice in relation to further advice given to three clients in contravention of s946B(3A) and regulation 7.7.09. The Sitting Panel found that the further advice given to the three clients was personal advice and it was inappropriate that it was given in general advice letters. The relevant provider did not act in the best interests of the clients as required by s961B(1) as the relevant provider had not kept adequate records e.g. to reference the research that formed the basis of the recommendations or advice, such that the relevant provider could not prove that they had performed all the actions specified in s961B(2) e.g. conducted a reasonable assessment of the financial product recommended. Consequently, the Sitting Panel found that the relevant provider failed to demonstrate the Code of Ethics’ Values of competence and diligence, and breached its Standards 5 and 8, thereby contravening s921E(3). As a result of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) that the relevant provider receive specified supervision, being that the relevant provider engage an independent person with expertise in financial services laws compliance to pre-vet and audit the next 10 pieces of advice that the relevant provider intends to present to a retail client. The relevant provider is required to provide the independent person’s findings as a result of their audit to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.

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07/08/2023

Mr K

N/A

Reprimand issued under s921T(1) of the Corporations Act 2001

The relevant provider recommended in a statement of advice (SOA) that the clients switch their superannuation from one fund to another, and transfer their life and TPD insurance (through super) to another provider. Upon discovering that the full amount of cover could not be transferred without further underwriting, the relevant provider did not revisit the advice but instead recommended in a record of advice (ROA) that the clients apportion their cover between the new and existing provider up to the maximum amount allowed without underwriting. Although the clients held life and TPD insurance in their existing superannuation fund, the relevant provider failed to consider their existing insurance or conduct an insurance needs analysis. The advice was also inappropriately scoped being limited to superannuation products only when the clients were also seeking retirement planning advice. The Sitting Panel determined that in giving the advice, the relevant provider contravened s961B(1), s961G, s961J(1) and s921E(3) of the Corporations Act 2001. In giving the advice, the relevant provider failed to demonstrate the Code of Ethics’ values of competence and diligence and breached Standards 2 and 5 of the Code of Ethics.

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26/07/2023

Mr X

N/A

Instrument issued under s921L(1)(a)(iii) of the Corporations Act 2001

The relevant provider gave Statements of Advice (SOA) to three clients (on the same day) which the Sitting Panel determined involved contraventions of sections 961B(1), 961G, 947D(2) and 921E(3) of the Corporations Act 2001. The relevant provider adopted the layered advice strategy for each of the three clients, in circumstances where it was not appropriate to do so. It was not clear as to how the limited insurance advice scope was effective in each client’s circumstances without a contemporaneous assessment of their superannuation. The relevant provider did not adequately consider the three clients’ objectives, needs and financial situation or base all judgements on their relevant circumstances. For example the client files showed the collection of minimal information about their debts and expenses and they lacked explanation as to the bases for the insurance covers recommended. The relevant provider relied on generic, unsubstantiated reasons to support the recommendations for the replacement insurance products. All three clients appeared to be under-insured as a result of the relevant provider’s recommendations. Further, when previously recommending the three clients rollover their superannuation funds, the SOAs did not include any product replacement information as it related to the clients’ residual superannuation balances e.g. no comparisons of fees or risks, or identification of any benefits lost by closing their existing superannuation accounts. In giving the advice, the relevant provider failed to demonstrate the Code of Ethics’ Values of trustworthiness and diligence, and breached Standards 5 and 6 of the Code of Ethics.

As a consequence of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) of the Corporations Act 2001 that the relevant provider receive specified supervision, being that the relevant provider engage an independent person with expertise in financial services laws compliance to pre-vet and audit the next 10 SOAs that include a recommendation in relation to insurance; and the next 10 SOAs that include a recommendation in relation to superannuation, that the relevant provider intends to present to a retail client. (NB. an SOA may include a recommendation in relation to both insurance and superannuation.) The relevant provider is required to provide the independent person’s findings as a result of their audit to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.

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20/06/2023

Mr M

N/A

Instrument issued under s921L(1)(a)(iii) of the Corporations Act 2001

The relevant provider recommended in a Statement of Advice (SOA) that the client, who had been cold-called, switch their superannuation from one fund to another. The Sitting Panel determined that in giving the advice, the relevant provider contravened s961B(1), s961G, s1041E(1) and s921E(3) of the Corporations Act 2001. Although the client held life, TPD and IP insurance in their existing superannuation fund, the relevant provider failed to consider their existing insurance or give insurance advice to the client. The SOA recommended a high growth investment portfolio in the recommended superannuation fund despite the client having a growth risk profile. The SOA also contained retirement projections which had no basis in fact, and which the Sitting Panel is satisfied were used to induce the client into accepting the relevant provider’s recommendation. The Sitting Panel’s findings include that the SOA was presented to the client on the day after the fact find was completed, and on the same day that the client completed a risk profile questionnaire, demonstrating that the relevant provider could not have properly enquired about or considered the client’s needs and objectives.  In giving the advice, the relevant provider failed to demonstrate the Code of Ethics’ Values of trustworthiness, competence, honesty, fairness and diligence, and breached Standards 2, 5 and 9 of the Code of Ethics.

As a consequence of the relevant provider’s conduct, the Sitting Panel issued a written direction under s921L(1)(a)(iii) of the Corporations Act 2001 that the relevant provider receive specified supervision, being that the relevant person engage an independent person with expertise in financial services laws compliance to pre-vet the next 10 SOAs the relevant provider intends to present to a retail client. The written direction also requires the relevant provider to engage the independent person to select and audit 10 SOAs that the relevant provider presented to retail clients between 1 February 2023 and 30 April 2023. The relevant provider is required to provide the independent person’s findings as a result of their audits to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.

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29/05/2023

Mr S

N/A

Instrument issued under s921L(1)(a)(iv) of the Corporations Act 2001

The relevant provider impersonated a client during two telephone conversations with a bank in an attempt to facilitate a transaction for the client’s benefit. The relevant provider did not obtain any benefit as a result of the telephone conversations. The Sitting Panel determined the relevant provider contravened s1041H and s921E(3) of the Corporations Act 2001, and issued a direction under s921L(1)(a)(iv) of the Corporations Act 2001 that the relevant provider provide a copy of three successive compliance audits undertaken by their licensee in relation to personal advice they have given to retail clients, with a minimum of 12 months between each successive audit, commencing in 2023, within 30 days of 30 June of the relevant year.

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