Watch out, ASIC’s on the compliance warpath, and it’s got financial advisers in its sights.
The regulator has written to Macquarie Private Wealth regarding potential shortcomings when it comes to best interest provisions, claims a report in the Australian Financial Review.
According to the report, ASIC is investigating whether the bank’s stockbroker “has provided the full and necessary information required in statements of advice if advisers are acting in the best interest of clients and the bank’s compliance systems”. It added that Macquarie has been asked to provide more information to the regulator.
News of the ASIC probe comes on the back of its recent action against Addwealth Financial Services.
Earlier this week the regulator announced that it had imposed additional conditions on the Australian financial services licence of the West Australian-based financial advice business, following a surveillance operation.
ASIC was concerned that Addwealth may have failed to provide advice that was appropriate to certain clients in light of their circumstances, and that Addwealth may have failed to have in place adequate arrangements for the management of conflicts of interest.
The new conditions have required Addwealth to appoint an external compliance consultant who will regularly report to ASIC over the next 15 months.
According to an ASIC statement, the consultant will test and report on matters including Addwealth’s overall compliance arrangements, and the quality of financial product advice provided to its clients. This includes the advice given with respect to their investment in the Addwealth Achiever Fund.
ASIC Commissioner Peter Kell said ASIC will seek the imposition of more onerous licence conditions and independent oversight where there are concerns advice may not be meeting required standards.
The compliance-heavy nature of financial planning has proven to be a hot topic of late, with industry stalwart Barry Lambert recently stating that compliance hurdles would put him off joining the profession were he a young person today.
“I remember the first Choice review. There were eight judges on the Choice review – seven of them were compliance managers,” he said at the No More Practice Live event in Sydney. “There was no regard for the quality of advice; it was whether or not you ticked this box, ticked that box and all did this bullshit that we call financial planning today. And that has been what’s wrong with the industry.”