ASIC imposes licence conditions on AFSL over unlicensed advice concerns

ASIC has imposed licence conditions on a financial services firm following concerns its customer service representatives have been giving unlicensed advice.

Australian Financial Services (AFS) licensee Kalkine Pty Limited must appoint an independent compliance consultant to address ASIC concerns that Kalkine’s customer service representatives were giving unlicensed advice.

The regulator said that new licence conditions have been imposed on Kalkine’s AFSL to ensure compliance with its obligations, with these conditions requiring Kalkine to engage a consultant to review, assess and report to ASIC whether Kalkine’s interactions with its customers are compliant and its supervision mechanisms are adequate.

Where shortfalls are identified, the independent compliance consultant will make recommendations to address the deficiencies that must be implemented by Kalkine.

“AFS licensees are responsible for the conduct of their representatives and must have adequate supervision arrangements in place to ensure their representatives comply with the law when engaging with customers,” said ASIC deputy chair Sarah Court.

“As a result of our investigation we remain concerned that Kalkine fell short in meeting its obligations, leading ASIC to take the significant step of imposing new licence conditions. Kalkine will now undergo an external review to ensure it acts lawfully and within the scope of its licence.”

Among ASIC’s concerns are that the firm’s representatives, who are based in India, may have provided personal advice as part of the sale of subscription services when Kalkine’s AFS licence only authorised it to provide general financial product advice.

Additionally, ASIC said:

• Kalkine’s representatives may have misrepresented to customers the kind of advice being given, by qualifying this as general advice, but leaving customers with the impression that the advice was directed to their own personal circumstances.
• It failed to do all things necessary to ensure that the financial services covered by its AFS licence were provided efficiently, honestly and fairly, including but not limited to ensuring the advice being given by its representatives was appropriate and within the scope of its licence.
• Kalkine’s processes to ensure that its representatives were complying with the law when interacting with consumers were inadequate.

Kalkine, which is a Sydney-based financial services group that provides equity research reports through a subscription service available on its website, has agreed to the new licence conditions being imposed.