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ASIC forces licensee into external review

An Australian financial services licence holder has agreed to address concerns raised by ASIC about SMSF advice provided to clients by its corporate authorised representative.

According to a statement released by the corporate regulator, AFS licence holder, Sentry Financial Services Pty Ltd has agreed to address concerns raised by ASIC about SMSF advice provided to clients by its corporate authorised representative, Connect Financial Services Pty Ltd. 

ASIC stated its surveillance of Sentry identified concerns surrounding SMSF advice provided to clients by Connect that may not have complied with, including the requirement for a Statement of Advice to be given to the client, the requirement to act in the best interests of the client and provide appropriate advice, and the product replacement disclosure requirements when recommending the replacement of one financial product with another.

ASIC stated it was also concerned that Sentry may not have complied with its obligations as an AFS licensee to “properly monitor and supervise Connect and ensure Connect was adequately trained and competent to provide SMSF advice.”

In response, Sentry has agreed to write to 158 clients that received an SMSF promotional letter from Connect to inform the clients that the letter contained personal financial advice and to offer the clients a review so that any necessary remedial action can be undertaken.

Sentry has also agreed to engage an independent expert to review 17 client files of Connect that involved the establishment of an SMSF and make recommendations regarding any deficiencies identified and, where relevant, recommend remediation and/or compensation for the client.

The independent expert will report to ASIC and Sentry to ensure ASIC's concerns are addressed, ASIC stated.
“Establishing an SMSF is one of the most significant steps an investor can take in relation to their retirement savings,” said ASIC Senior Executive Leader, Louise Macaulay.


“It involves taking greater personal responsibility for retirement investments. Those advising on SMSFs should be offering personal financial advice which considers the consumer's individual circumstances and makes sure the advice adequately meets their needs.”

“AFS licensees are responsible for the conduct of their representatives in this regard and must be held accountable for any compliance failures.”