Systemic issues still haunt the industry
Despite the introduction of a new regulatory environment and the increased focus on compliance, systemic issues still seem to haunt the financial advice industry.
The Financial Ombudsman Service (FOS) has identified planner conduct and inappropriate claims handling as possible systemic issues during the December 2013 quarter, with record-keeping and compliance being the most prevalent issues.
FOS released its January edition of The Circular - a quarterly online magazine distributed to members - in which it noted a number of disputes over the last quarter that all related to a single authorised representative.
“The disputes appeared to raise similar issues relating to the classification of the customer’s investment style and the appropriateness of advice the authorised representative had provided,” FOS said.
“Given the number of disputes we had received about the particular adviser, we wrote to the financial services provider to let them know there was a possible systemic issue.”
This resulted in a review and an audit, after which FOS concluded that the conduct of the authorised representative in question gave rise to the possibility of inappropriate advice having been given to a wider group of customers, which led FOS to consider it a “definite systemic issue”.
Inadequate claims handling and inappropriate charging of fees by some financial services providers were also identified by FOS as possible systemic issues during the December quarter.
The ombudsman service stated it had reported new systemic issues to the financial services regulator, the Australian Securities and Investments Commission.
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