The Australian Securities and Investments Commission has accepted an enforceable undertaking (EU) from a South Australian dealer group which employed a number of ex-AAA Financial Intelligence advisers.
Following an ASIC surveillance operation, Adelaide-based PGW Financial Services has agreed to implement a regime of supervision, review and audit by an ASIC-approved compliance expert for a period of at least 15 months.
The regulator said that it had identified a number of instances where PGW advisers:
- Failed to demonstrate reasonable basis for the recommendations made to clients
- Failed to comply with disclosure obligations applying to advice on switching financial products
ASIC said it undertook the surveillance following PGW’s appointment of a number of ex-AAA Financial Intelligence representatives, adding it was concerned that PGW failed to assess the competency of representatives before their appointment.
AAA Financial Intelligence’s license was cancelled in 2013 after it uncovered repeated failures with respect to risk advice provided to clients (see: AAA License Cancelled Due to Inappropriate Insurance Advice). In particular, ASIC expressed concerns, at the time of its review of AAA Financial Intelligence, that its advisers had been providing unnecessary insurance replacement advice.
A spokesperson for ASIC said the regulator could not comment on whether the switching advice issues identified within PGW related to insurance products.
Meanwhile, ASIC has also released details of its enforcement actions over the last six months.
Of the 256 actions undertaken from 1 January to 30 June 2014, 48 were cases of misconduct in the financial services sector.
ASIC reported that it pursued criminal action in four cases of financial services misconduct, two of which related to dishonest and unconscionable conduct.
The regulator also advised it was continuing its focus on the advertising of financial products, and would take enforcement action on advertisements it considered misleading or deceptive.
‘Allowing industry to simply correct advertising after the fact does not always provide a sufficient incentive to ensure its accuracy in the first place. We will take action where we identify advertisements that are likely to mislead consumers,’ ASIC said in its report.
ASIC recently asked Industry Super Australia to make changes to its ‘Compare the Pair’ ad campaign, after it failed to provide sufficient detail to consumers (see: Compare the Pair Ads Misleading).
