FSCP issues direction over super, insurance advice

The Panel found that the relevant provider, identified as Mr R, failed to make reasonable enquires when providing advice to retail clients in 2024, leading to a contravention of sections 961B(1), 961G and 921E(3) of the Corporations Act 2001. 

Specifically, it determined that Mr R had fell short of his obligation to make reasonable inquiries into the client’s pre-existing medical condition and to undertake an appropriate investigation of replacement insurance prior to recommending replacement cover. 

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“The relevant provider also failed to investigate product eligibility and to base recommendations on the client’s circumstances when advising on the transfer of insurance cover from one provider to another,” the Panel said. 

As a result, it found that Mr R had “failed to demonstrate the Code of Ethics’ value of competence and diligence”, breaching Standards 5, 8 and 9 of the Code. 

Standard 5 requires relevant providers to make product recommendations only in the best interest of the client that are appropriate to the client’s individual circumstances, as well as ensuring they fully understand the costs, risks and benefits of recommendations given. 

Further, Standard 8 means relevant providers are obligated to maintain complete and accurate records of their clients while Standard 9 dictates that all advice must be “offered in good faith and with competence and be neither misleading nor deceptive”. 

For breaching the Corporations Act and the Code, Mr R was handed written direction by the Panel requiring him to engage an expert in compliance within financial services laws who must then conduct an audit the next 10 pieces of advice given to a retail client which include a recommendation in relation to superannuation and/or insurance. 

The compliance professional must then detail any changes to Mr R’s licensee for approval, with all costs to be covered by the relevant provider. 

Within 30 days of the final audit, the compliance professional must prepare and submit a report to ASIC the result of all 10 audits, including any suggested changes and the licensee’s decision regarding approval of the suggested changes. 

This decision by the Panel marks its eighth so far in 2026, half of which occurred in April alone. 

Most recently, an adviser identified as Mr B was ordered to undertake additional continuing professional education (CPD) covering ongoing fee arrangements and advice, and compliance, following a contravention of s921(3) of the Corps Act. 

The FSCP determined at the time that Mr B had had entered into an ongoing fee arrangement with four clients but failed to meet part of his obligation under these agreements. These clients had agreed to pay fees for annual advice reviews to be conducted within the 12-month review period relevant for each client, however, the Panel found that Mr B had failed to do so.