financial planning groups in regional areas will face a stricter program of regulatory spot checks by the Australian Securities and Investments Commission (ASIC) after the corporate watchdog accused rural planners of presenting a greater risk to consumers.
Money Management has confirmed that ASIC will begin a program of compliance check-ups for advisers in rural areas from next month.
ASIC compliance officers will be visiting providers in large regional centres, primarily to ensure they are meeting paperwork requirements under the new Financial Services Reform Act and that planners are not exceeding their authority in advice giving.
They will also be calling upon brokers, insurance agents and superannuation advisers.
ASIC executive director of financial services regulation Ian Johnston told Money Management that advisers in rural areas may present a greater risk of compliance breaches.
“If you are a licensee, you should expect to deal with the regulator regardless of where you are located,” he said.
“Our previous work tells us that there are sometimes compliance issues because they [regional advisers] don’t get the same attention from the dealer groups… and the further out, the higher the risk rate.”
But dealer groups have rejected ASIC’s claims.
Bruce Birchall, national manager for Charter Financial Planning, said the same compliance audit approach to their advisers is adopted “irrespective of their geographical location”.
“In addition, we have an audit ranking process which determines the continuing audit program at an individual adviser level.”
One likely regional centre on ASIC’s hit list will be the city of Newcastle in NSW.
However, Mark Arnold, principal of Lawler Financial Services and a founder of the financial planning course at Newcastle University, welcomed ASIC’s interest.
“Centres such as Newcastle, Lismore and Tamworth are all part of Australia and should receive the same level of regulation as any other,” he said.
“I consider that regulation is required and fees must be disclosed, and those advisers [who don’t] should be outed.”
Johnston confirmed to Money Management that the “transparency of fees” would be a strong area of focus for ASIC in the spot checks.
He said the rural compliance check-ups would not involve any “shadow shopping” visits by ASIC officers.
Next week: Special report — financial planning in rural Australia.
