ASIC Clamps Down on ‘Independent’ Claims

The Australian Securities and Investments Commission (ASIC) has targeted three financial services providers using the term ‘independent’ resulting in them removing or amending any claims about the independence of their services.The three groups – Wilson HTM, iSelect Life and Citywide Insurance Brokers and Financial Planners – made the changes after ASIC raised concerns about the use of the term. ASIC stated that both Wilson HTM and iSelect Life accepted volume-based payments and commissions from product issuers in relation to the provision of financial services and advice, while Citywide is a corporate authorised representative of Suncorp Financial Services whose authorised representatives may be remunerated through commissions.

According to the corporate regulator, Wilson used the term ‘independent’ to describe its business on its website and in a consumer brochure, iSelect used the term to describe its services in three marketing emails sent to consumers, while Citywide used the term on its website to describe its’ advisers.

The three groups have removed the term ‘independent from their websites and marketing material and taken steps to review their marketing approval processes.

In the past ASIC has stated it would publicly name entities which were found to be unlawfully making statements about the independence of the licensee or the services they provide with use of the term ‘independent’ restricted under the Corporations Act to those who do not receive commissions, volume-based payments or other gifts or benefits, and operate a financial services business without any conflicts of interest.

ASIC has also banned a former NAB adviser from providing financial services for five years for engaging in misleading and deceptive in relation to a superannuation transfer.

The corporate regulator banned Gerard McCormack of South Melbourne, Victoria, who was employed by National Australia Bank (NAB) during the time of the misconduct in mid 2013.

An investigation by ASIC found McCormack had:

• phoned an industry superannuation fund falsely representing that he was a member of the superannuation fund in order to obtain information on that fund member’s superannuation account when not authorised to do so;
• witnessed his client phone and falsely represent he was the same member of the superannuation fund to gain further personal superannuation account information about, as it transpired, a third party; and
• assisted his client complete and lodge false withdrawal forms, using the information previously obtained relating to that member’s superannuation account, so that all funds were improperly transferred to his client.

McCormack, who is the 14th adviser to be banned as a result of ASIC’s Wealth Management Project, has applied to the Administrative Appeals Tribunal for a review of ASIC’s decision.