The Australian Securities and Investments Commission (ASIC) said the action follows targeted surveillance that found Shartru was not adequately monitoring and supervising its representatives. ASIC also found that some of Shartru’s financial advice failed to meet the best interests duty and related obligations.
The additional licence conditions require Shartru to engage an independent consultant to review and make recommendations on its audit processes.
The corporate regulator added that the independent consultant must also review a sample of advice, audits, and pre-vets and report on the effectiveness of the improvements made by Shartru.
“AFS licensees are responsible for ensuring their representatives comply with financial services laws,” ASIC said.
“ASIC expects licensees to have adequate audit processes to monitor and supervise their representatives. AFS licensees should conduct sufficient periodic audits of their advisers and use suitably qualified staff to conduct these audits.”
Shartru has held its AFS licence since 30 July 2012. The licence conditions were imposed by consent following Shartru’s engagement in addressing ASIC’s concerns.
The corporate regulator has also cancelled the AFS licence of Stephen Wan Tat Chan.
The licence was cancelled because the licensee failed to prepare and lodge the required financial statements and auditor opinions with ASIC.
ASIC added that the licensee failed to pay ASIC’s industry levies and maintain an external dispute resolution membership with the Australian Financial Complaints Authority (AFCA). The cancellation took effect on 28 June 2023.
“Under the Corporations Act, ASIC may suspend or cancel an AFS licence if a licensee fails to meet its general obligations under s912A,” ASIC said.
“This includes the obligation to hold membership of a dispute resolution system and lodge financial statements annually with ASIC.”
The licensee can apply to the Administrative Appeals Tribunal (AAT) for a review of ASIC’s decision.
Shartru are not the only self-licensed group out there who I believe are not meeting their best interest duties. These self-licensed advisors leave the large licensee regime, and with no one looking over their shoulder, are susceptible to having their ethical boundaries start to shift, result in less favourable outcomes for consumers. I think there needs to be a new type of role created e.g., Auditor of Financial Planners, where these new auditors must meet certain regulatory requirements or lose their ability to offer these services. This would also reduce conflict of interest risks where currently compliance officers are paid to do the work and may lose their client if the outcome is not to the self-licensees liking. I think if we had this new role, we would see an increase in compliance from these self-licensed groups. We need to do all we can to protect consumers.
Yeh right sounds awesome, LET”S INCREASE RED TAPE AND COMPLIANCE.
FFS Warren, ASIC, GOVT, Pollies and Blind Freddy ALL know most of the rubbish compliance is useless, costly, box ticking rubbish along with costly, wasteful, useless SoA’s, etc.
How about we focus on reducing the BS mass over compliance and let Advisers advise clients.
Be it small AFSL’s or large reduce compliance rubbish must occur.
Such silly comments. Shartru is a dealer group and not ‘self-licensed’. Just a poor, ill informed comment
Shartru have a poor reputation in the market and have done so for ages. Why does it take ASIC so long to one identify this and 2 do something about it? Unfortunately, there are a small number of AFSL’s playing by the rules and then the rest who are flying under the radar.
Oh Dear!!
Rob, this isn’t a good development. Hope it doesn’t impact you too much.
I guess you may need to re-visit the “Shartru Way”, as there may not be as many “leading financial planners for other like-minded financial planners” with the business as you thought. Perhaps you’ll also need to revisit the Shartru “simple philosophy” of: “Our people take good care of their clients, while we take good care of them.” According to ASIC, you haven’t been taking care of Shartru’s clients by not meeting the best interests duty and related obligations.
I know you have been a very vocal advocate of the industry, but there is a lot to be said about keeping you head down. I’m hoping this isn’t a targeted revenge play by ASIC.