Advice failures related to two retail clients have led to a relevant provider, anonymised as “Mr G”, being directed by the Financial Services and Credit Panel (FSCP) to receive specified supervision.
The FSCP sitting panel determined that the relevant provider “failed to accurately identify the clients’ goals, failed to make reasonable inquiries to obtain complete and accurate health information for one client, failed to consider the insurance information in relation to one client, and failed to consider the risk profiles of the clients”.
It also found the statements of advice (SOA) did not address all of the clients’ goals and did not “ensure that the clients kept their existing insurance until their new insurance was in place”.
Additionally, the relevant provider failed to ensure that the SOAs they provided set out the “potential benefits, pecuniary or otherwise, that may be lost by implementing the advice”, as well as any “significant consequences of implementing the advice”.
The failures listed, the FSCP said, constituted contraventions of s961B, s961G, and s947D of the Corporations Act.
The adviser was also reprimanded for prioritising “his and his associates own interest in generating commissions over the clients’ interests in maintaining their insurance cover and keeping their costs low”.
The FSCP added that the relevant provider failed to demonstrate the Code of Ethics’ values of competence, fairness and diligence, and breached Standards 3 and 5 of the Code of Ethics.
As a result, the panel ordered that the relevant provider receive specified supervision from an independent compliance professional at their own cost and audit the next 10 pieces of advice that they intend to present to a retail client, as well as the next five pieces of insurance advice if there is no insurance advice included in the first 10.
The relevant provider is then required to provide the independent compliance professional’s findings to the Australian Securities and Investments Commission.
“The adviser was also reprimanded for prioritising “his and his associates own interest in generating commissions over the clients’ interests in maintaining their insurance cover and keeping their costs low”. Beyond supervision. No 2nd chance. Remove them from the profession. We should never tolerate this behaviour. The FSCP is gutless.
I think we do ourselves no favours by trying to defend this. It is not acceptable to be cancelling existing insurance before the new cover is in force. That is ‘Advice 101’. If the adviser doesn’t get this, then he certainly needs to be supervised.
It didn’t say the adviser cancelled the insurance, ensuring a client keep cover is a different position. Without knowing details, which no one reading the above only does, it is difficult to assess.
Let’s see how many of the new
“Qualified Advisers” inside vertically integrated, single product only Industry Super Funds Will recommended to tear up external, high quality insurance cover to transfer cover to low grade product inside the fund on the basis of cost saving??
It will be a complete mess & will be of major detriment to many, many people.
Let’s see how the FSCP handles those cases?
Look at report 639 ASIC AFCA EVERYONE knows Industry Fund advice ruins people’s lives and is just toilet product sales. They don’t care though and in fact encourage it. Australians deserve better but the corrupt compliance economy is fat from parasitically eating advice professionals who want to act in clients best interest
Is this the so called Single Disciplinary Body ?
How many disciplinary bodies do Advisers actually have ?
– FSCP,
– ASIC,
– APRA,
– AFCA,
– FARSEA,
– TPB,
– AFSL’s
– Associations like FAAAAAAAAAAA, SMSFA, etc
“failed to make reasonable inquiries to obtain complete and accurate health information for one client” ???
Is this a new thing ?
Even a fool can find a fault if they dig deep enough.
slow news day?
“It also found the statements of advice (SOAs) did not address all of the clients’ goals”
Someone should tell the FSCP members to read the Corps Act and RG 175
An SoA does not need to address “all of the clients goals”, it only needs to address the Subject Matter
Why are people, with power of advisers’ lives ignorant of the law?
If the FSCP wants any type of credibility, it needs to stop behaving as an ignorant and ideological kangaroo court.
They should publish the names of the three FSCP panel members so that when they make an appalling ruling, everyone can see where the problem might be. We can also spot patterns.
FSCP members shouldn’t hide behind “privacy” especially if they are going to ruin lives.
As for the accidental cancellation of insurance before the new one is in place. Mistakes happen. Unless it is systemic, which there is no evidence here that it is, why is the FSCP making a federal case out of it and ruining careers again? Remediate and move on.
Suggest you go and read RG 175 again. Read about explicit and implicit advice, as well as understanding the difference between goals and needs. Relevant subject matter in this case absolutely includes the need to ensure insurance isn’t cancelled before the new cover is in place. Cancelling cover before new cover is in place is not a ‘simple mistake’ at all.
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