Advisers surprised by breaches reported to ASIC
An increasing number of financial advisers who are getting their own Australian financial services licence (AFSL) or moving to smaller boutiques have found themselves to be the subject of a breach notification without prior knowledge.
Speaking to Money Management, Holley Nethercote partner, Paul Derham, said this was the latest problem to arise from the raft of compliance layers that were coming into place over the next few months.
“There have been a number of advisers who have been subject to a breach notification or some other notification as a previous licensee has gone and told something negative to the Australian Securities and Investments Commission [ASIC] but the adviser did not know,” he said.
“We’re starting to see a lot of that happen with advisers going and getting their own licences and going to smaller boutiques and then discovering things have been said about them.
“This is not a problem for everyone but it’s a new problem now that larger dealer groups are reporting so much misconduct and that’s a new thing.”
The new breach reporting regime would commence on 1 October, 2021, and licensees must lodge a report within 30 days of when they believed there would be or had been a significant breach.
However, Derham said a lot of bigger dealer groups had been reporting things that “might not even meet the current definition of a breach”.
“Advisers don’t know it’s happening and they’re applying for licences and then ASIC says ‘we’re going to impose a compliance consultant condition or limit you in this way or show us what your responses are to these allegations’,” he said.
“And sometimes advisers are surprised when they can’t get information from their dealer group [about the report].”
Derham noted there were shared support offerings by law firms and some banks for advisers looking to go out on their own.
“You can go out on your own these days and get that wrap around support that you need that’s more available than that’s been,” he said.
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