ASIC claims it has no pre-determined compliance rate for advice
The Australian Securities and Investments Commission (ASIC) has claimed not to have a pre-determined compliance rate or test pass rate when it is undertaking advice reviews.
Defending its approach to Report 639 covering advice within superannuation, ASIC said its response to the advice review component within that report had been “commensurate with the concerns identified in that review”.
“While we found that 36% of files did not demonstrate full compliance with the best interests duty and related obligations, this was as a result of procedural, disclosure or record keeping deficiencies and did not indicate the member was at risk of suffering financial or non-financial detriment,” it said.
“A smaller subset of 15% of files indicated that the member was at risk of suffering financial or non-financial detriment.”
“ASIC does not have a pre-determined compliance rate or test pass rate. When ASIC undertakes advice reviews in its projects, it assesses the advice records for compliance and reports on the outcome of the assessment. Further work undertaken by ASIC as a result of the advice reviews depends on the nature and scale of concerns identified. For example, for files reviewed as part of REP 639 where there was an indication that the member was at risk of suffering financial or non-financial detriment, we engaged with the advice licensee about our expectation that they review the advice and where required, remediate those affected members,” the regulator said.
“We note that whether the law should be amended following an ASIC review, such as REP 413 and REP 639, is a policy matter for Government”.
Queensland Liberal backbencher, Bert Van Mannen had used the Parliamentary Joint Committee on Economics and Financial Services to question why ASIC had not used Report 639 to call for major reform of the superannuation advice sector.
“Does a 49% compliance rate pass the test? If so the 2021 ASIC review for life insurance advice delivers a better outcome. Why then would ASIC call for further reforms to life insurance commissions?”
Recommended for you
As private markets maintain their position in the spotlight amid ASIC scrutiny, an adviser and an investment specialist have highlighted the growing reliance on AFSLs to guide advisers’ use of the asset class.
Vital Business Partners has thrown its support behind ASIC’s review of advice businesses’ use of offshore service providers, urging business to reassess their own set-ups.
Forbes Fava Saville has announced the appointment of a new senior financial planner, expanding its ranks to help serve clients across its Victoria offices.
Marking off its first year of operation, Perth-based advice firm Leeuwin Wealth is now looking to strengthen its position in the WA market, targeting organic growth and a strong regional presence.
