ASIC Called to Publicly Name Errant Advisers

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The Australian Securities and Investments Commission (ASIC) should be given the authority to publicly report individual advisers and their licensees for misconduct according to a report from a Parliamentary Committee examining the financial services of the four major banks.

The Review of the Four Major Banks: First Report from the House of Representatives Standing Committee on Economics also recommended that clients of advisers who had engaged in misconduct be contacted by their licensee to notify them of potential problems with advice provided.

In calling for ASIC to establish an annual public reporting regime for the wealth management and advice sectors, the Committee stated the regulator should provide detail on the overall quality of the advice industry and on any misconduct in the provision of financial advice by Australian Financial Services Licence (AFSL) holders, their representatives, or employees.

the Committee stated the regulator should provide detail…on any misconduct in the provision of financial advice

The Committee stated that consequences for authorised representatives of an AFSL holder who had been found guilty of misconduct in the provision of financial advice should be made publicly available as should any relevant consequences for the AFSL holder.

This information should be collected and reported on an industry and individual service provider basis with the Committee recommending this reporting regime could be modelled on that proposed for the life insurance industry under which claims data and outcomes will be collected.

“Regular reporting of this information in the life insurance and wealth management industries will effectively supplement the information provided in each institution’s public regulatory breach reporting and further empower consumers to take their business to firms with a history of delivering for their clients,” the report stated.

“These reforms, coupled with the introduction of a product intervention power for ASIC;…product design and distribution obligations for financial service providers; and a broad review of ASIC’s enforcement regime, should address the majority of the institutional drivers of poor financial advice,” the report also said.

“AFSL holders should not expect consumers to be monitoring ASIC’s website to learn of misconduct…”

The Committee added to its public reporting recommendation by also suggesting AFSL holders notify the clients of financial advisers when they become aware that an adviser has breached their legal obligations.

In making this recommendation the Committee stated the financial advice sector was not being sufficiently accountable to the general public nor to its own customers and it was unreasonable to expect consumers to seek information about breaches of obligations by advisers.

“When a financial advisor is found guilty of misconduct, the committee believes that the clients of that advisor should be notified as soon as possible. The committee was disappointed to learn that this is not standard industry practice,” the report stated.

“AFSL holders should not expect consumers to be monitoring ASIC’s website to learn of misconduct – particularly misconduct that may have been systemic and may have resulted in their savings being placed at elevated levels of risk.”



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