Commonwealth Financial Planning (CFP) has agreed to conduct a comprehensive review of its risk management framework following an investigation into the actions of some of the group’s financial advisers.
Under the terms of the Enforceable Undertaking (EU), CFP will be required to assess its legal and regulatory compliance processes in relation to the provision of financial services, financial advice and the monitoring and supervision of its representatives.
The EU follows an investigation by the Australian Securities and Investments Commission (ASIC) into the conduct of former CFP adviser Don Nguyen, who was subsequently banned from providing financial advice for seven years.
As a result of the inquiry, ASIC raised concerns over CFP’s risk management practices, including whether:
- There were adequate processes in place to deal with ongoing non-compliance risks
- Misconduct by Authorised Representatives had been dealt with in a consistent manner
- Adequate controls over client records were applied
- There was consistent application of CFP’s complaints handling processes
- Data analysis processes and reporting allowed for early detection of advice process irregularities
ASIC Chairman, Greg Medcraft, said: “This EU is significant as it requires CFP to comprehensively examine its risk management system to ensure non-compliance issues will be detected at the earliest possible stage and remedied.”
“It demonstrates ASIC will hold gatekeepers to account and expects licensed entities offering financial services to have the requisite systems in place and resources committed to their supervision, so financial consumers are confident when dealing with advisers,” he added.
ASIC says it continues to investigate several other former CFP advisers.
