ASIC explains AAA Shares ban
The Australian Securities & Investments Commission has released information about its cancellation of the financial services licence of AAA Shares and AAA Financial Intelligence (AAA), announced on Thursday 31 January.
Having undertaken surveillance of AAA since June 2010, ASIC determined the financial planning business was in breach of the Corporations Act 2001 and conditions of its AFS licence, subsequently terminating the licence.
In the updated guidance issued on Wednesday 6 February, ASIC explains the 186 authorised representative-strong planning network had implemented a business model in which cash flow was correlated with the number of advisers admitted to the network.
“The fee charged did not maintain sufficient financial resources to comply with its general obligations,” the guidance document explains, adding that the company failed to maintain adequate human and technological resources and records of staffing, employment and client base.
The watchdog also found AAA had failed to ensure its authorised representatives were sufficiently trained and compliant with the relevant laws and regulations.
It found there had been inadequate advice auditing procedures in place, breaching the group's own audit policy.
“Licensees have a general obligation to do all things necessary to ensure they provide financial services efficiently, honestly and fairly,” ASIC commissioner Peter Kell reiterated in a statement accompanying the released information.
“AAA Financial Intelligence was found to have an appalling record that put at risk the quality of advice it provided to retail clients,” he added.
ASIC has instructed AAA representatives to communicate the consequences of the licence cancellation to clients.
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