The Australian Securities and Investments Commission’s (ASIC) second FSCP finding relates to an adviser known only as “Mr M”.
The FSCP found that “Mr M” recommended in a statement of advice (SOA) that his client, who had been cold-called, switch their superannuation from one fund to another.
As such, the FSCP’s sitting panel determined that the relevant provider contravened several sections of the Corporations Act 2001. He also failed to demonstrate the code of ethics’ values of trustworthiness, competence, honesty, fairness, and diligence and breached Standards 2, 5, and 9 of the code.
According to a summary of the decision, Mr M failed to consider the life, TPD, and IP insurance the client held in their existing superannuation fund when recommending the switch.
Moreover, the FSCP said the SOA recommended a high growth investment portfolio in the recommended super fund despite the client having a growth risk profile.
“The SOA also contained retirement projections which had no basis in fact, and which the sitting panel is satisfied were used to induce the client into accepting the relevant provider’s recommendation,” it said.
The sitting panel also found that the SOA was presented to the client on the day after the fact find was completed, and on the same day that the client completed a risk profile questionnaire, demonstrating that the relevant provider could not have properly enquired about or considered the client’s needs and objectives.
As a consequence of this conduct, the FSCP has issued a written direction under the Corporations Act that obliges Mr M to receive specified supervision, being that he engages an independent person with expertise in financial services laws compliance to pre-vet the next 10 SOAs he intends to present to a retail client.
The written direction also requires Mr M to engage the independent person to select and audit 10 SOAs that he presented to retail clients between 1 February 2023 and 30 April 2023.
“The relevant provider is required to provide the independent person’s findings as a result of their audits to ASIC, and the relevant provider must bear the cost of the work undertaken by the independent person under the written direction.
The FSCP’s first decision concerned an adviser known only as “Mr S”, who was found to have impersonated a client during two telephone conversations with a bank in an attempt to facilitate a transaction.
The panel found that Mr S contravened the Corporations Act and directed him to provide three successive compliance audits from their licensee concerning personal advice they have given to retail clients, with at least 12 months between the audits.
The FSCP kicked off at the start of last year, with its 31 part-time members being appointed in February.
Speaking at the FAAA roadshow event in Sydney last month, Leah Sciacca, a senior executive leader for financial advisers at ASIC, confirmed that neither the register nor the press release would typically disclose the name of the financial adviser involved in a particular matter unless the outcome is required to be displayed on the Financial Advisers Register (FAR).
Ms Sciacca also explained that a summary of the decisions made by the FSCP, which was established under the Better Advice Bill as the single disciplinary body for financial advisers, will be published on the FSCP Outcomes Register, and occasionally accompanied by a media release.
