ASIC has imposed additional conditions on the Australian financial services (AFS) licence of AMP Financial Planning Pty Ltd (AMPFP).
The conditions were imposed when ASIC granted AMPFP’s application to vary its AFS licence to provide managed discretionary account (MDA) services, and follows an ASIC surveillance of AMPFP’s MDA services and advice business.
The ASIC surveillance involved on-site interviews with AMPFP compliance personnel about processes and systems, and with the advisers who provide MDA services and advice. It also included reviews of AMPFP’s documented processes and systems, its client advice files and adviser audit files.
ASIC imposed additional licence conditions on AMPFP to ensure that AMPFP had adequate arrangements in place to comply with obligations related to the provision of MDA services.
MDAs create particular risks for retail clients because when a client enters into a contract with an MDA provider, they give the provider authority to make investment decisions on their behalf on an ongoing basis without seeking the client’s prior approval.
The additional conditions were tailored to AMPFP in response to observations from ASIC’s surveillance. The conditions were put in place to ensure that AMPFP adequately monitors and supervises the MDA services provided by its advisers, and that its advisers are adequately trained and meet their best interests obligations.
The conditions also seek to ensure that when providing MDA services AMPFP has the necessary human, financial and technological resources, as well as the risk management and internal dispute resolution systems and maintains adequate records.
ASIC Commissioner Danielle Press said, ‘ASIC expects to see improvements in the standards of supervision, conduct and compliance across the financial advice industry, and the imposition of additional licence conditions is part of ongoing efforts to make our expectations clear to AFS licensees.
‘ASIC will impose licence conditions based on what an applicant is seeking authorisation for, what we know of them, and what we may see during the application assessment process. New licence applicants and licensees seeking variations can expect to see ASIC tailor licence conditions more often,’ Ms Press said.
AMPFP had previously been providing limited MDA services relying on a no-action position issued by ASIC.
In September 2016, ASIC advised the market that it was revoking its no-action position in relation to MDA services conducted on a regulated platform involving only the re-balancing of assets on the regulated platform (Refer 16-333 MR). Licensees were given a two-year transition to obtain a licence variation for authorisation as an MDA provider to continue ‘dealing by issue’ in relation to MDA services on a regulated platform. AMPFP was one such licensee.
ASIC has the power to impose additional licence conditions under s914A of the Corporations Act.