Financial planning licensees have been sent another signal by the Australian Securities and Investments Commission (ASIC) that they have to be more discerning about recruiting authorised representatives, particularly those from failed planning groups.
ASIC has used its latest Enforcement Outcomes report to drive home the message, exampling the 2014 enforceable undertaking imposed on PGW Financial Services and that group's recruitment of advisers previously employed by AAA Financial Intelligence and AAA Shares Limited.
The ASIC enforcement report made clear that the regulator had an expectation that when dealer groups recruited authorised representatives from companies which had had their licenses cancelled, they would put in place rigorous monitoring systems.
In what appeared to be a clear reference to the need for dealer groups to impose a strong filter, ASIC referred to the need for companies to assess the competence of advisers at the time of appointment them and then to carry out ongoing checks.
"AFS licensees must ensure they have appropriate resources and procedures in place when providing financial services to retail clients. These arrangements should be reviewed when licensees increase their numbers of representatives, particularly where representatives have come from other licensees," ASIC said in its enforcement report.
"Licensees need to assess the competence of representatives at the time of appointing them and put in place rigorous checks to ensure financial services provided by them are of the expected standard," it said.
