FSCP issues reprimand over SOA failings
The Financial Services and Credit Panel (FSCP) has made its latest ruling over a case involving an incorrect Statement of Advice.
In a brief statement, the FSCP said it had reprimanded the relevant provider for personal advice provided to a retail client between June and October 2022 which contravened the Corporations Act.
“The sitting panel determined that it reasonably believed that the relevant provider contravened sections 1041H and 921E(3) of the Corporations Act 2001 in relation to personal advice given to a retail client between June 2022 and October 2022 inclusive.
“The relevant provider was responsible for the backdating of some documents on a client file, including a Statement of Advice.”
As well as the contravention of the Statement of Advice, the panel said the relevant provider also failed to demonstrate five of the Code of Ethics’ standards. In particular, Standard 8 states an adviser must ensure that client records, including former clients, are kept in a form that is complete and accurate.
“Consequently, the relevant provider failed to demonstrate the Code of Ethics’ values of diligence and trustworthiness and breached its Standards 1, 2, 4, 5 and 8.”
The affected standards include:
Standard 1: You must act in accordance with all applicable laws, including this Code, and not try to avoid or circumvent their intent.
Standard 2: You must act with integrity and in the best interests of each of your clients.
Standard 4: You may act for a client only with the client’s free, prior and informed consent. If required in the case of an existing client, the consent should be obtained as soon as practicable after this Code commences.
Standard 5: All advice and financial product recommendations that you give to a client must be in the best interests of the client and appropriate to the client’s individual circumstances. You must be satisfied that the client understands your advice, and the benefits, costs and risks of the financial products that you recommend, and you must have reasonable grounds to be satisfied.
Standard 8: You must ensure that your records of clients, including former clients, are kept in a form that is complete and accurate.
Research by Money Management found, so far, breaches of Standard 5 are the most common to be picked up by the FSCP.
Last month, actions on three different Statements of Advice related to insurance and superannuation have led to a relevant provider being directed to receive specified supervision. The panel ordered that the relevant provider receive specified supervision from an independent compliance professional at their own cost at pre-vet the next 10 superannuation and next 10 insurance SOAs that they present to a retail client.
The relevant provider is then required to provide the independent compliance professional’s findings to ASIC.
Click here to read Money Management’s summary of previous FSCP findings and which actions are occurring most.
AUTHOR
Laura Dew
Recommended for you
As the year draws to a close, a new report has explored the key trends and areas of focus for financial advisers over the last 12 months.
Assured Support explores five tips to help financial advisers embed compliance into the heart of their business, with 2025 set to see further regulatory change.
David Sipina has been sentenced to three years under an intensive correction order for his role in the unlicensed Courtenay House financial services.
As AFSLs endeavour to meet their breach reporting obligations, a legal expert has emphasised why robust documentation will prove fruitful, particularly in the face of potential regulatory investigations.
I don't have any faith in the regulator. I've stopped reading these and just think some poor guy got busted for a spelling mistake. I'm actually starting to root for the criminal.
So standard 5 success is a bit dependent on the brain of the inspector. JG