ASIC cautions on adviser recruitment
The financial services regulator has urged dealer groups to be careful when hiring planners who previously worked for dodgy advice practices.
The Australian Securities and Investments Commission (ASIC) deputy chair Peter Kell said he saw many dealer groups accept significant numbers of financial planners from licensees that the regulator had previously taken action against.
"‘Generally, licensees have good compliance and governance standards and ensure representatives go through rigorous checking before taking them on," Kell said.
"However, we want to make sure that all licensees are fully aware of the need to do this," he added. "The reputation of a firm can painstakingly be built over a number of years but seriously damaged overnight through poor representatives."
Kell's comments follow numerous licence cancellations in the last few months, such as that of Perth-based Addwealth Financial Services and Sydney's Flowers Financial Management.
Recent months also saw the cancellation of AAA Financial Intelligence, with Suncorp-owned Guardian Advice calling first dibs on its authorised representatives.
Large financial advice groups are offering refuge to authorised representatives of the AFS Group, which entered into administration less than two years after the regulator imposed additional conditions on its licence.
Another financial planning business which had additional conditions imposed on its licence is Lionsgate Financial Group, while Morrison Carr spectacularly exited the market last year.
"Where representatives have come from an environment in which there was a culture of poor compliance or poor quality advice, appointing licensees need to take extra care to satisfy themselves that representatives are properly trained and monitored to address early any issues that might arise," Kell said.
ASIC is continuing to closely scrutinise licensees' obligations to demonstrate adequate monitoring and supervision.
"Monitoring and supervision are much more than audits and compliance checks," Kell said.
"They are about proactively ensuring that advice is appropriate and clients are treated fairly," Kell said."
The regulator is calling on all licensees to ensure migrating representatives are competent and adequately trained.
"It is important that they are effectively screened and their background checked," ASIC said.
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