Clarity required on reportable situations about other licensees
Breach reporting issues regarding reportable situations about other licensees goes beyond the provision of poor advice and advisers may be unaware of the potential issues.
On a BT podcast, Brian Pollock, director of corporate governance at the Principals Community, which was an advisory council for self-licensed advisers, outlined some areas where he had encountered advisers with breach reporting issues.
He said: “The most controversial [issue] I think is reportable situations about other licensees and their financial advisers in relation to personal advice to retail clients.
“This is certainly an area that has traded a fair degree of discussion and confusion. For me, it clearly goes beyond the provision of poor financial advice, which is typically what advisers are focusing on when they think about reporting other advisers.
“This can go so far as to matters where an external adviser refuses to turn off the ongoing advice fees when a client terminates the ongoing fee arrangement and such action would be reportable against that adviser and that licensee.”
When it came to the common breaches that Pollock encountered, he said ongoing advice fees made up around two-thirds of the breaches reported.
“There’s a range of reason for this, it could be the adviser had the conversation with the client and then forgot to create a workflow task to up the fees because it’s a manual process. Or they hand it over to their admin manager who forgets to process it.
“Or two of the three funds are turned off and a third is missed. Or it could be the fee consent forms have all been turned back but they forgot to provide their renewal notice so the agreement terminates because they haven’t renewed it. So there are lots of different reasons for this manual process to fall over.”
He said he would like to see regulatory relief applied to these type of cases as they were often simple mistakes where the client was quickly remediated but the cost of manage the breach process far exceeded the remediation cost.
“For such immaterial matters, it would be good to see some common sense being applied.”
AUTHOR
Laura Dew
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
