The Australian Securities and Investments Commission (ASIC) has found that two Commonwealth Bank-owned advice businesses have complied with licence obligations to remediate customers affected by poor advice, but have not always done so within the timeframes required.
ASIC made the statement as part of its release of a report into the steps taken by Commonwealth Financial Planning Limited (CFPL) and Financial Wisdom Limited (FWL) to contact and compensate clients of 15 former advisers who received advice between 2003 and 2012.
The report, compiled by KordaMentha Forensic, found the two advice groups met four of eight licence conditions on time with another four completed to a high level, usually above 98% of completion, on each occasion.
These conditions included providing reasonable access for a compliance expert, sending written communications to affected clients, providing information to independent advisers where requested, enacting a further review by the licensee and notification of the outcome of that review and licensee status reports to ASIC as well including the conditions on a CBA Board meeting agenda.
ASIC said that while CPFL and FWL had failed to meet specified time frames in communicating with customers or providing them and their independent advisers with relevant information to assess their advice or compensation “…the licensees subsequently rectified these deficiencies by providing the information to the clients and advisers. ASIC does not propose taking any further action”.
The report stated the two licensees had dealt with 4333 cases of advice, including 2707 clients who received advice from the 15 advisers and a further 1626 cases were there was no evidence of advice having been provided, and was required under additional conditions imposed on CFPL and FWL in August 2014.
In other ASIC action, the regulator has wrapped up its monitoring of one financial advice provider but has begun similar work with another regarding concerns around best interest duties for clients.
ASIC stated it had finished monitoring Lionsgate Financial Group, following the placement of additional conditions on the group’s Australian financial services licence in 2013.
Those conditions required the appointment of an independent expert to review Lionsgate’s compliance arrangements, and for the auditing of advice provided by Lionsgate’s representatives, with Lionsgate implementing a number of recommendations. ASIC stated those actions resulted in the regulator concluding its monitoring of Lionsgate.
ASIC, however, will require Carwardine Financial Services, a Brisbane based accounting and financial advice firm, to undergo an independent external review of its compliance with the financial services laws.
The move comes after a September surveillance raised concerns around compliance with the obligation to act in the best interests of clients and the appropriateness of advice provided to clients.
ASIC said it was also concerned about Carwardine’s resources and ability to comply with its obligations as a licensee and to carry out supervisory arrangements and ensure that its representatives complied with financial services laws.
In the Open Advice Review Program, hundreds of clients have been identified as having no documentation/files/file notes or electronic files kept by CBA owned Licensees. Why are they getting away with this?
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