FSCP warns adviser over ROA usage
The Financial Services and Credit Panel (FSCP) has issued a warning to a relevant provider for failing to provide a client with a Statement of Advice (SOA).
In its latest determination, issued on 5 August, the panel issued a warning regarding advice provided to retail clients between February 2022 and November 2022.
This was because the relevant provider contravened the Corporations Act by failing to provide an SOA after giving personal advice to the client.
“The circumstances of the contravention were that between February 2022 and November 2022, the relevant provider gave Records of Advice to clients in reliance on Statements of Advice that had been given to the clients by a different providing entity,” the panel stated.
According to ASIC, a Record of Advice 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.
This is only the second time that the panel has issued a warning since the panel’s introduction early last year.
It is the second determination in less than a week after an individual received a written direction when the sitting panel determined that the relevant provider “failed to accurately identify the clients’ goals, failed to make reasonable inquiries to obtain complete and accurate health information for one client, failed to consider the insurance information in relation to one client, and failed to consider the risk profiles of the clients”.
As a result, the panel ordered that the relevant provider receive specified supervision from an independent compliance professional at their own cost and audit the next 10 pieces of advice that they intend to present to a retail client, as well as the next five pieces of insurance advice if there is no insurance advice included in the first 10.
The relevant provider is then required to provide the independent compliance professional’s findings to ASIC.
AUTHOR
Laura Dew
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