ASIC threatens action around adviser reference-checking

ASIC has warned it will take action against the major financial institutions if they do not start making efforts to provide and obtain “meaningful references” before hiring new financial advisers, saying the regulator can only do so much to control the spread of dodgy advice.

Last week, ASIC released the findings of its review into how institutions have dealt with adviser non-compliance, highlighting the need for better reference-checking processes to prevent rogue advisers from circling the industry.

Speaking at the ASIC Annual Forum in Sydney yesterday, ASIC deputy chair Peter Kell said these issues cannot be fixed “at the flick of a switch”.

However, he wants to see quick results from the Australian Bankers' Association's recently announced Reference Checking and Information Sharing Protocol – which will help banks share information on poorly-behaved financial advisers.


“Otherwise there will be continuing pressure for more reviews,” Mr Kell said.

“We will start naming and shaming those institutions that we find to have failed when it comes to the provision or checking of references. If these things don’t work, it will be a big problem.”

The review stemmed from serious concerns about past adviser conduct, ASIC said last week, with the objective of lifting standards at major financial advice providers.

Other issues highlighted in the report include auditors failing to identify non-compliance and allowing rogue advisers to go undetected. Further, the regulator discovered significant delays between institutions first becoming aware of misconduct and reporting it to ASIC.

During the forum yesterday, Mr Kell added that the regulator was about to embark on more reviews within the life insurance industry.

“We’ve got major work underway in relation to the provision of life insurance advice. We’ve got a major focus on the direct sale of life insurance and we’re about to embark in a review there,” he said.

“We’re looking closely at some of the issues that arise in insurance that is provided through superannuation, and of course we’ve got a major focus on claims handling.

“These are issues we need to confront because I think we can see right around the world that the financial services sector and aspects are not working right across the community the way they are.”

ASIC threatens action around adviser reference-checking
ASIC threatens action around adviser reference-checking
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