ASIC monitoring financial services company following concerns over SMSF advice

by AB18 Sep 2013

ASIC has imposed an additional license condition on Moneywise Securities Pty Ltd (Moneywise) after a surveillance identified concerns about advice provided to clients regarding margin lending and the establishment of an SMSF.

The regulator’s surveillance found concerns relating to:

  • Advice that did not adequately consider the specific needs of the client but recommended the client establish a margin loan or SMSF;
  • Compliance with the disclosure requirements when the advice provided to clients included the replacement of one financial product with another. The concerns related to inadequate cost and feature comparisons between the clients’ existing superannuation and the recommended SMSF, and
  • The management of conflicts of interest where the advice provided to clients resulted in transactions with a related entity of Moneywise.

“When providing advice on more complex financial products such as margin loans or SMSFs, the advice provider must be particularly diligent in ensuring the financial product is suitable to the specific needs of the client,” says ASIC senior executive leader, Louise Macaulay.

An independent expert will be appointed to review, assess and make recommendations regarding:

  • The advice provided by Moneywise to clients in relation to margin lending and SMSFs;
  • The adequacy of Moneywise’s conflicts management arrangements;
  • Moneywise’s measures for monitoring and supervision of representatives, and
  • The adequacy of Moneywise’s internal dispute resolution system.

The independent expert will report to ASIC and Moneywise over the next 18 months to ensure the regulator’s concerns are addressed.

ASIC acknowledges Moneywise’s cooperation during the surveillance and its commitment to improving compliance with their licence obligations.