ASIC accepts EU from SMSF advice firm
ASIC has accepted an enforceable undertaking (EU) from a self-licensed advice firm and its director after a surveillance found the firm failed to provide appropriate SMSF advice.
In a statement, the corporate regulator said Sydney-based CMH Financial Group and its sole director Daniel White did not demonstrate that the advice provided was in clients' best interests and did not comply with product replacement advice disclosure obligations.
The advice included establishing SMSFs where the starting balances were below $200,000, which ASIC believes is not in clients' best interest when taking into account the impact of CMH's fees, the statement said.
The clients were also advised to engage in "high-risk gearing" strategies that seemed inappropriate. Further, there was inadequate monitoring and supervision of representatives by CMH, ASIC said.
In response to ASIC's concerns, CMH has agreed to appoint an independent expert to audit reviews and test the compliance of its SMSF advice. The expert will also review the firm's conflicts management arrangements and measures for monitoring representatives.
In addition, all advisers at CMH providing SMSF advice will be required to complete SMSF training, the statement said.
ASIC deputy chairman Peter Kell said: "Advice providers need to ensure their processes and documentation demonstrate that they have acted in the best interests of their clients."
He added: "Setting up an SMSF is a significant financial step for consumers and many factors can impact their decision. It is therefore important that consumers receive quality, compliant advice that will assist them in making informed decisions about their retirement savings."
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