Commonwealth Financial Planning aims to improve risk framework
An enforceable undertaking (EU) offered by Commonwealth Financial Planning (CFP) to the Australian Securities and Investments Commission (ASIC) was the result of self-reporting, with the EU aimed at improving the overall risk management framework of the licensee, according to Colonial First State general manager of advice Marianne Perkovic.
CFP has been working with ASIC on the matter since 2008. The case is based on the actions of a small number of advisers, including former CFP adviser Don Nguyen (who earlier this year received a seven-year ban from ASIC), Perkovic said.
Where advice was reviewed and found to be inappropriate, CFP has brought the client back to where they would have been financially without that advice, she added.
From an industry-wide perspective, a lot of the reviewing of adviser actions is based on the audit process. Reviewing whether advice was appropriate happens after the advice has been implemented. CFP is now working through the EU to try to build a good model for early detection pre-transaction, Perkovic said.
"This is essentially about confirming our commitment to the voluntary program we've already commenced," she said. "We consider this an opportunity to strengthen our risk management framework and operating model, which supports our advisers and clients."
While the EU is limited to CFP, the group will seek to implement its benefits across all of its dealer groups, she said.
"This program seeks to establish that ownership of consistent risk management practices starts at the individual financial adviser level," she said.
Some changes arising from the program have already been implemented, including the integration of administration systems and increased focus on training and education, CFS stated.
According to ASIC, under the EU CFP will develop an implementation plan to address any unresolved deficiencies identified by the assessment of its risk management framework, and the process will be subject to a two-year review.
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