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ASIC accepts EU from HSBC Bank

ASIC has accepted an enforceable undertaking from HSBC Bank Australia after a surveillance found advisers were giving "potentially deficient advice" on products.

The corporate regulator said the EU will see HSBC review and remediate clients who were advised on retail structured products between January 2009 and March 2013.

ASIC said its surveillance found instances where advisers had obtained little to no information about clients' relevant personal circumstances before recommending the product. ASIC became concerned that the advice may not have been appropriate for the clients.

HSBC subsequently reviewed all of its advice on structured products and lodged a breach notification with ASIC, reporting potential deficiencies in the advice provided to about 464 of the 557 clients reviewed.

Under the EU, HSBC is required to develop and implement a remediation plan to ensure that affected clients are reviewed and remediated in an "efficient, honest and fair manner".

Further, it will also be required to develop and implement an assessment plan to determine whether the problems identified in the advice on structured products extend to clients who were advised to invest in other types of products between January 2009 and March 2013, and if so, to ensure those other affected clients are also fairly remediated.

An independent expert will be appointed by HSBC to report to ASIC on the adequacy of the review and remediation program.


ASIC deputy chairman Peter Kell said: "One of the fundamental obligations of financial advisers is to ensure that financial products are appropriate for the consumers' needs and circumstances. Where that doesn't occur, ASIC will intervene to ensure that affected clients are reviewed and compensated fairly and consistently."

"Clients affected by the breach will have an opportunity to have their advice reviewed, and where instances of poor advice that led to financial loss are identified, to receive compensation. The independent expert will assess the adequacy of the remediation program, HSBC's compliance with the EU, and will report its findings to ASIC."