Sydney-based Spring Financial Group has entered into an enforceable undertaking with the Australian Securities and Investments Commission (ASIC).
The regulator announced the enforceable undertaking today and said it had followed an investigation which gave rise to concerns about the level of monitoring and supervision of the representatives Spring Financial appointed.
It said that under the EU, Spring Financial must appoint an independent consultant to review its business and develop a plan to rectify the deficiencies.
ASIC said the independent expert would report regularly to ASIC over the next year on Spring Financial's implementation of the plan.
ASIC said the EU followed on from an investigation into Royale Capital Pty Ltd (Royale), an authorised representative of Spring Financial between October 2011 and June 2012, and other businesses.
ASIC's investigation into Spring Financial found deficiencies in the group's compliance measures, including the monitoring and supervision of authorised representatives' activities to ensure compliance with the financial services law, and insufficient training processes and education of authorised representatives.
The ASIC announcement noted that a trial date of 14 October this year had been set for ASIC's civil case against a group of individuals and businesses, including Royale, ActiveSuper Pty Ltd, and Craig Gore and his wife Marina Gore, who allegedly used money invested by self-managed super funds for purposes other than which it was intended.
It said the matter would be heard in the Queensland Registry of the Federal Court.
Spring has also announced that it intends to pursue legal action against Royale Capital and its principals, with the action to focus on contractual, compliance and statutory breaches during Royale's time as a corporate authorised representative of Spring.
In a statement released to the media, Spring said: "Royale was authorised to provide only general financial product advice in relation to limited classes of financial products" and "at no stage was Royale authorised by Spring to provide any form of personal advice or to deal in any class of financial product".
Spring said it would seek damages, costs and other orders and might broaden the action to include a Royale-affiliated company, Active Super, and its principals.
Spring said Royale, Active and their respective principals were subject to restraining orders made in Federal Court proceedings commenced by ASIC, which alleged that Royale engaged in the unsolicited hawking of financial products, provided inadequate financial product disclosure and provided misleading or deceptive information.