The Turnbull Government welcomes ASIC’s final report into the supervision of financial advisers by the major banks and AMP.
The review looked at legacy cases that occurred between January 2009 and June 2015 and assessed how the large licensees have monitored and supervised their adviser networks, including how they have dealt with advisers suspected to have engaged in serious misconduct.
ASIC has identified a number of areas of compliance monitoring that should be improved within the large licensees, including:
- prompt notification to ASIC where the licensee holds serious concerns about an adviser’s conduct;
- implementing adequate background and reference-checking processes; and
- implementing adequate audit processes to assess whether financial advice complies with the 'best interest' duty, under the Future of Financial Advice law, and other legal obligations on licensees.
“This review shows that ASIC is taking proactive steps to monitor the financial advice sector’s compliance with the law, and to work with the sector to improve practices, to prevent future harm to consumers,” the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, said.
“ASIC has said that it will engage with each of the institutions to address the issues that have been identified, and will consider enforcement action in appropriate cases.”
Minister O’Dwyer said ASIC’s work is complemented by the Turnbull Government’s recent reforms to raise the professional, education and ethical standards of all financial advisers, and to remove inappropriate incentive structures for the sale of life risk products to retail consumers.
The professional standards reforms will enhance the financial adviser register, introduced by the Government in 2015, so that consumers can readily access information about their financial adviser, including whether the adviser has been subject to disciplinary action by a relevant compliance monitoring body.
Commissions paid on the sale of life insurance products were originally left out of the FOFA reforms.
“The Turnbull Government has acted to address the risk that commissions on the sale of life risk products will incentivise advisers to act in a way that is not in the best interests of their clients,” Minister O’Dwyer said.
“We have established the ASIC Enforcement Review Taskforce, which will consider and make recommendations to Government on ASIC’s powers and enforcement toolkit. The Taskforce will specifically consider whether changes should be made to improve the breach reporting framework, and what this would look like.
“We have also committed to putting in place a one-stop-shop for consumer complaints that will provide speedy and independent access to justice, have the power to make binding determinations and to provide compensation.
“The Turnbull Government is taking action now to address the past issues that have occurred in the financial services industry and will continue to implement the most ambitious financial system reform agenda in modern history.”