Adviser sees registration suspended over ROA usage
The Financial Services and Credit Panel (FSCP) has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
It has suspended the registration of financial adviser Ian Reid for three months, effective 21 November 2024.
With this, Reid’s financial adviser registration will not be in force till February 2025, and he is not permitted to provide personal advice to retail clients in relation to relevant financial products.
Reid was referred to the FSCP by ASIC following a review that examined why some superannuation members continued to invest in persistently underperforming investment options under their choice superannuation products.
According to the FSCP, Reid had not complied with his obligations when providing advice to three clients, using records of advice (ROA) that relied on statements of advice (SOA) that had been given to the clients up to seven years ago.
“The FSCP was reasonably satisfied that the further advice exemption from giving an SOA in regulation 7.7.10AE of the Corporations Regulations 2001 did not apply to two of the three clients because there had been changes in those clients’ relevant personal circumstances which were significantly different from that in relation to the previous advice,” it said.
It said it was reasonably satisfied that the s961B and s961G obligations were not complied with for all three clients, explaining there was “not sufficient evidence” on the client files:
- That reasonable enquiries were made about the client’s relevant circumstances
- That, of the enquiries that were made, the results of those enquiries were taken into consideration and advice scoped appropriately
- That the clients’ strategic advice needs were taken into consideration
- Demonstrating why the previous recommendations in the SOA remained appropriate, and
- That the relevant provider based all judgements in advising the client on that client’s relevant circumstances.
According to ASIC, an ROA is a simple record that confirms the advice provided by an advice licensee or an adviser, shorter and less formal than an SOA. It is often given to existing clients to confirm changes to, or implementation of, advice that has been provided in a previous SOA.
The three scenarios when an ROA can be used instead of an SOA are for further advice, when there is no buy or sell product advice, and for small investment advice regarding assets less than $15,000.
Previously, the FSCP issued a warning in August to a relevant provider for failing to provide a client with an SOA.
It issued a warning regarding advice provided to retail clients between February 2022 and November 2022, noting the relevant provider contravened the Corporations Act by failing to provide an SOA after giving personal advice to the client.
It marked the second time the panel had issued a warning since the panel’s introduction in early 2023.
AUTHOR
Rhea Nath
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This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, opaque authority capable of destroying a livelihood over what is, at its core, a "wrong paperwork" issue. The suspension of a financial adviser’s registration for three months due to an alleged misuse of Records of Advice (ROAs) is an egregious overreach.
The FSCP's approach is fundamentally flawed. When courts deliver rulings, there is transparency—judges are named, and their reasoning can be scrutinized. Here, the FSCP’s “panel of three” operates behind a veil of secrecy, leaving the industry guessing about who is making these career-ending decisions. How can the profession engage in meaningful analysis when the arbiters of these decisions remain anonymous?
An honest review of FSCP verdicts reveals a troubling pattern: the overwhelming majority involve procedural breaches, not substantive client detriment.
The FSCP itself is redundant. Its very existence is premised on the unfounded idea that AFSLs are incapable of adequately monitoring and supervising their advisers. This assumption undermines the system of responsible managers that the law itself entrusts with oversight. If there is actual client detriment, AFCA is a sufficient and appropriate jurisdiction. If there isn’t, then the AFSLs should handle such matters internally.
The FSCP creates fear within the profession without offering any interpretative clarity or meaningful contribution to understanding the law. Its rulings, such as this one, are a net negative for the industry—heavy-handed, authoritarian, and ultimately destructive. Much like the disbanded FASEA, the FSCP is an unnecessary layer of bureaucracy that should be terminated.
Using an ROA instead of an SOA is not an act worthy of suspending someone’s livelihood. Those who think otherwise are promoting an authoritarian approach that has no place in this profession. The FSCP’s actions are not protecting clients—they are punishing advisers for procedural missteps. This is regulatory overreach at its worst, and it must be addressed before more careers are needlessly destroyed.