ASIC holding licensees to account for planner actions

The Australian Securities and Investments Commission (ASIC) has used the cancelling of a small planning group’s license to stress that licensees and how they monitor their planners remains a key area of focus.

In doing so, ASIC has made clear that licensees as well as the planners they employ will be held accountable.

ASIC cancelled the license of Evermore Money Management on the basis that it was failing to comply with several key obligations as an Australian Financial Services licensee.

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The regulator said it had cancelled the license after undertaking a surveillance which found that a representative of Evermore had advised clients to set up a self-managed superannuation fund (SMSF) and invest their superannuation in Evermore.

ASIC said it found Evermore had failed to adequately monitor and supervise its representatives and manage conflicts of interest and that under the terms of the cancellation, the firm is required to wind down its financial services business by this Thursday, 20 December.

The regulator said the cancellation the Evermore AFSL was part of its ongoing efforts to improve standards across the financial services industry.

“AFS licensees are responsible for making sure that their authorised representatives are aware of their obligations. This means that licensees must ensure that their policies and procedures are up to date and comply with the law. They must also have robust procedures in place to check that their authorised representatives are complying with those policies,” the ASIC announcement said.

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It will be interesting as to whether this is consistently applied regarding the licensee across the board. The big bank-owned groups more than likely are given a carve-out and exclusion card. Maybe a get out of gaol free card.

It is next to impossible to have "robust procedures" in place to effectively monitor authorised reps, when those reps are employees of their own companies rather than the licensee. A licensee simply cannot have the required level of visibility or control over people it doesn't employ.

While there has been a lot of talk about individual licensing, it isn't a feasible solution. The solution is to get rid of "Corporate Authorised Representatives". If planners want to operate their own business, they should be required to get an AFSL for that business. Otherwise they should become employees of an AFSL holder.

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