ASIC's latest financial advice update has flagged a compliance gap directly relevant to brokers: licensees are appointing advisers without completing mandatory reference checks.
The regulator's ASIC Protocol, which has required full compliance since March 2025, obliges any AFS licensee taking on a new representative to obtain a reference from that person's current or recent licensee before employing or authorising them — a requirement that explicitly extends to "a financial adviser or mortgage broker," per the update.
Non-compliance carries a financial penalty, and ASIC noted it may also suspend or cancel a licensee's licence or impose extra conditions. The regulator went further, urging licensees to scrutinise representatives who've moved from firms with known compliance issues, "noting that there are a number of publicly known AFS licensees with recent compliance concerns highlighted by ASIC actions."
Separately, ASIC's review of professional indemnity insurance data identified 10 licensees reporting less than the $2 million minimum cover required under Regulatory Guide 126.
Following enquiries, ASIC found nine of the 10 had simply misreported their actual cover and corrected the error. The remaining licensee, however, genuinely held inadequate insurance and has since lodged a breach report and begun winding up its licence.
ASIC said adequate PI insurance remains "an essential component of the compensation framework," designed to protect clients against losses from poor advice or misconduct.
The update also catalogued a lengthy run of recent bannings and licence cancellations, many tied to inappropriate superannuation advice involving high-risk products such as the Shield Master Fund.Cases included multi-year bans for advisers who recommended clients invest most of their retirement savings into products with limited performance history, alongside licence cancellations linked to unpaid Compensation Scheme of Last Resort payouts.
ASIC also confirmed it continues cracking down on unlicensed "finfluencers," working alongside 16 international regulators to disrupt unlicensed financial promotion online.
That activity sits within a wider pattern. ASIC received 9,807 misconduct reports in the first half of 2026 and secured a record $830 million in civil penalty orders over 2025–26, with $644 million returned to Australians.
For brokers and licensees, the update is a clear signal that reference checks, insurance reporting, and advice quality remain firmly in ASIC's sights heading into the final quarter of 2026.
See the ASIC media release for more information.
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