ASIC finds issues with insto handling of rogue advisers

ASIC has released the findings of its review into how financial advice institutions have dealt with non-compliant advisers.

The review – which forms part of ASIC’s broader Wealth Management Project – focused on the conduct of the financial advice arms of AMP, ANZ, CBA, NAB and Westpac.

It arose out of serious concerns about past adviser misconduct, ASIC said, with the objective of lifting standards in major financial advice providers.

As a result of the review, the regulator said it has found a number of areas of concern where further improvements need to be made, including:

• failure to notify ASIC about serious non-compliance concerns regarding adviser conduct;
• significant delays between the institution first becoming aware of the misconduct and reporting it to ASIC;
• inadequate background and reference-checking processes; and
• inadequate audit processes to assess whether the advice complied with the 'best interest' duty and other obligations.

ASIC deputy chairman Peter Kell said, “Failure or delay in notifying ASIC of suspected serious non-compliant conduct significantly affects our ability to take appropriate enforcement or other regulatory action.

“More importantly, it may also result in an increased risk of customer detriment as so-called 'bad apple' advisers continue to work in the industry.

“Strengthening breach reporting requirements will be an important issue in the current review of ASIC's enforcement powers announced by government in October 2016.”

More to come.

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