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August 25, 2016

Financial group held to account over representative

 

Following an investigation that commenced in January 2016, the Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking (EU) offered by My Adviser Pty Ltd.

The ASIC investigation looked at the conduct of My Adviser, the holder of an Australian financial services licence, in relation to the supervision and monitoring of its representatives, in particular Arion Financial Pty Ltd and its predecessor Sleipner Financial Pty Ltd – collectively Arion.

Arion was a financial advice business based on the Gold Coast in Queensland and was, from August 2012 to September 2014, a corporate authorised representative of My Adviser.

The ASIC investigation identified a number of instances of poor and unauthorised advice provided to clients of Arion, including advice apparently provided by Craig Gore.

The investigation also identified a number of failures by My Adviser in respect of its supervision and monitoring of Arion, and some of its other representatives.

As a result, ASIC announced that it is concerned My Adviser may have failed to comply with certain provisions of the Corporations Act including:

  • Section 912A(1)(ca) which required My Adviser to take reasonable steps to ensure that its representatives complied with financial services laws; and
  • Section 961L which required My Adviser to take reasonable steps to ensure that its representatives complied with s961B (the best interest provisions), s961G (the appropriate advice provisions) and s961J (the client priority provisions).

My Adviser has offered an EU that acknowledges these concerns and that they are reasonably held by ASIC.

Further, the EU requires My Adviser to:

  • repay clients who had transferred any monies to Arion (or certain related entities) following communications with Craig Gore;
  • engage an independent expert to review a sample of client files of My Adviser’s representatives and to then prepare a report as to compliance with sections 961B and 961G of the Corporations Act; and
  • prepare a remedial action plan to deal with the recommendations of the expert report.

ASIC acknowledges the assistance and cooperation of My Adviser in connection with the investigation, and also that My Adviser has commenced paying remediation to clients of Arion, with more than $2 million paid to date.

ASIC commissioner Greg Tanzer says: “All licensees must ensure that its representatives comply with the best interests obligations and where that doesn’t occur, ASIC will look to take action.”

“In this instance, we welcome My Adviser’s approach to resolving ASIC’s concerns and their ongoing remediation of their clients.”

 

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