ASIC accepts EU from Neo Financial
The Australian Securities and Investments Commission (ASIC) has accepted enforceable undertaking (EU) from Perth financial advice firm, Neo Financial Solutions, following concerns with the adequacy of the company's risk management and compliance framework.
According to ASIC, the company failed to address important client objectives by "not making reasonable enquires to determine all relevant client circumstances and not fully considering the consequences when replacing existing financial products".
In particular, Neo had:
- Inadequate resources to carry out monitoring and supervision;
- Inadequate identification, recording and assessment of risks;
- Audit and remediation programs which were not timely and effective in identifying and remediating advice conduct and deficiencies;
- Vetting policies and procedures which were not consistently applied or adequate to manage compliance risks; and
- Failed to take reasonable steps to ensure its authorised representatives complied with financial services laws.
- ASIC reviewed Neo's general obligations as an Australian financial services (AFS) licensee including its compliance and risk management framework such as programs, policies, procedures, and controls.
Also, the regulator tested the company's financial product advice provided to retail clients and its internal advice audits.
Under the EU terms, Neo would need to engage an independent expert to assess, report and make recommendations about the firm's framework.
ASIC deputy chairman, Peter Kell, said: "As this matter shows, inadequate risk management and compliance frameworks, combined with deficient application of a licensee's systems and controls can result in the provision of advice that does not serve the best interests of clients".
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