The Australian Securities and Investments Commission (ASIC) has imposed conditions on the Australian Financial Services Licence of advisory firm JB Global Pty Ltd following concerns around advice provided on a number of capital protected and structured products.
The regulator announced that it had also obtained corrective disclosure from JBG Structured Investments in relation to the JB Global Income and Equity Accelerator Units Services 12, 14 and 15 Product Disclosure Statement (PDS), dated 29 November 2010, on which JB Global was the lead adviser.
ASIC said that in reviewing JB Global’s advice on complex structured financial products, it had identified cases of inappropriate advice, failure to adequately investigate clients’ situations and inadequate consideration of the characteristics and risks of the structured products.
The regulator said it had also found instances of inadequate disclosure of adviser remuneration.
ASIC also pointed to deficits with respect to marketing material utilised by JB Global and the nature of its PDS.
Commenting on the concerns, ASIC chairman Greg Medcraft said the action with respect to JB Global had followed ASIC’s focus on structured product issuers and advisers.
“Investors must be able to confidently rely on the accuracy and appropriateness of information provided by product issuers and advisers,” he said. “Where that does not occur, ASIC will focus its resources and act appropriately, holding these important gatekeepers to account.”
ASIC said JB Global had agreed to implement a number of steps consistent with its new licence conditions including an independent review of 100 personal advice files provided on structured products during 2009 and 2010, remediating any clients who may have received inappropriate advice and facilitating independent advice to clients to ensure earlier advice was appropriate.
The company has also agreed to the appointment of a legal firm to monitor certain advertising and marketing material to ensure that it is not potentially deceptive or misleading.
ASIC said JB Global had indicated its intention to change to a general advice model, and had also implemented training programs and other systems and procedures to address compliance risks that may have contributed to the issues relating to the advice and marketing materials.
