ASIC claims it has no pre-determined compliance rate for advice
The Australian Securities and Investments Commission (ASIC) has claimed not to have a pre-determined compliance rate or test pass rate when it is undertaking advice reviews.
Defending its approach to Report 639 covering advice within superannuation, ASIC said its response to the advice review component within that report had been “commensurate with the concerns identified in that review”.
“While we found that 36% of files did not demonstrate full compliance with the best interests duty and related obligations, this was as a result of procedural, disclosure or record keeping deficiencies and did not indicate the member was at risk of suffering financial or non-financial detriment,” it said.
“A smaller subset of 15% of files indicated that the member was at risk of suffering financial or non-financial detriment.”
“ASIC does not have a pre-determined compliance rate or test pass rate. When ASIC undertakes advice reviews in its projects, it assesses the advice records for compliance and reports on the outcome of the assessment. Further work undertaken by ASIC as a result of the advice reviews depends on the nature and scale of concerns identified. For example, for files reviewed as part of REP 639 where there was an indication that the member was at risk of suffering financial or non-financial detriment, we engaged with the advice licensee about our expectation that they review the advice and where required, remediate those affected members,” the regulator said.
“We note that whether the law should be amended following an ASIC review, such as REP 413 and REP 639, is a policy matter for Government”.
Queensland Liberal backbencher, Bert Van Mannen had used the Parliamentary Joint Committee on Economics and Financial Services to question why ASIC had not used Report 639 to call for major reform of the superannuation advice sector.
“Does a 49% compliance rate pass the test? If so the 2021 ASIC review for life insurance advice delivers a better outcome. Why then would ASIC call for further reforms to life insurance commissions?”
Recommended for you
It can be extremely hard to realise the gains from financial advice M&A, according to Peloton Partners’ Rob Jones, and more could be gained from firms looking inward at their own practice.
With platforms reporting their quarterly results, there is a clear divide in the adviser markets they are targeting, according to platform specialist Recep Peker, and which would be right for your clients.
The Federal Court has imposed a $10 million penalty on Macquarie Bank for failing to prevent and control unauthorised fee transactions by third parties including financial advisers.
A financial advice firm has seen a weekly decline of 10 advisers, with all moving to a new licensee, while Centrepoint Alliance continues its “growth story”.
