ASIC has imposed additional conditions by consent on the Australian financial services (AFS) licence of SMSF Advisers Network Pty Ltd (SAN).
This follows a surveillance which ASIC commenced because of a significant increase in adviser numbers at SAN in a relatively short period of time.
As part of the surveillance, ASIC reviewed a number of SAN’s client files. This review identified concerns including that some of SAN’s advisers had failed to demonstrate compliance with the best interest duty and related obligations. ASIC found that the statement of advice (SOA) documents relied heavily on templated wording and many of the client files lacked evidence to support the advisers’ recommendations that clients establish a SMSF.
As a result, ASIC was concerned that SAN had inadequate supervision processes in place to ensure that advice provided by its representatives was in the best interests of clients.
The additional licence conditions require SAN to engage an independent expert to review and test the compliance of advice provided by SAN’s advisers and to assess whether SAN has appropriate supervision mechanisms in place to ensure that its advisers are meeting the best interest duty and related obligations. Where shortfalls in supervision arrangements are identified, the independent expert will make recommendations to address the deficiencies.
AFS licensees are responsible for the conduct of their representatives. ASIC expects licensees to have adequate supervision arrangements in place to ensure that their representatives comply with the law when providing financial product advice to consumers. It is essential that AFS licensees’ resources remain adequate, especially during periods of strong growth, to ensure compliance with their obligations. ASIC will continue to monitor movements in adviser numbers when targeting future surveillance work.
When providing SMSF advice, financial advisers are required to adequately demonstrate why an SMSF is appropriate for the client and why it is in the client’s best interests. ASIC expects financial advisers to use their skills, expertise and judgement in determining whether an SMSF is appropriate and not rely solely on client direction.
ASIC’s MoneySmart website provides useful information for consumers about SMSFs and important questions to ask before setting up an SMSF.
SMSF Advisers Network Pty Ltd has held AFS licence 430062 since 1 February 2013.
The licence conditions were imposed by consent as a result of SAN’s engagement in addressing the concerns identified during the ASIC surveillance.