ASIC looks to lift veil on fake ‘general advice’
The Australian Securities and Investments Commission (ASIC) has foreshadowed a crackdown on financial services licensees hiding behind general advice exemptions while really providing personal advice.
The regulator foreshadowed its action in its latest Enforcement Outcomes report via which it has signalled that financial advisers and financial advice licensees remain high on its agenda over a range of issues.
The regulator’s report said that, over the next six months, it would continue to focus on enforcing higher standards in the financial services industry, paying particular attention to range of issues including financial advisers’ compliance with their obligation to act in the best interests of the client (best interests duty) and the obligation to provide appropriate advice to clients.
It also foreshadowed further focus on the so-called “fee for no service” issue but then pointed to the misuse of the general advice exemptions, noting “instances where AFS licensees claim to provide general advice to retail clients during the sale of financial products (and therefore do not need to comply with the best interests duty and related obligations), but are actually providing personal advice”.
The focus on general advice by ASIC is expected to bring a range of financial services parties into play including banks, mortgage brokers and superannuation funds.
ASIC deputy chair, Peter Kell earlier this month told a Parliamentary Joint Committee that the regulator wanted to “make sure that we are not seeing the emergence of models that offer, in particular, quite complex financial products under a general advice arrangement that is seen to be in some ways designed to almost avoid the personal advice obligations and protections”.
“We don't want to see those sorts of models become widespread,” he said.
Recommended for you
Unregistered managed investment scheme operator Chris Marco has been sentenced after being found guilty of 43 fraud charges, receiving the highest sentence imposed by an Australian court regarding an ASIC criminal investigation.
ASIC has cancelled the AFSL of Sydney-based Arrumar Private after it failed to comply with the conditions of its licence.
Two investment advisory research houses have announced a merger to form a combined entity under the name Delta Portfolios.
The top five licensees are demonstrating a “strong recovery” from losses in the first half of the year, and the gap is narrowing between their respective adviser numbers.
