ASIC cancelled the AFSL of Sydney-based financial planning business AAA on 29 January, after surveillance of the business discovered major breaches of licence obligations. The details have only just been released following proceedings at the Administrative Appeals Tribunal.
AAA provided financial planning advice via a network of 186 authorised representatives. It adopted a business model that allowed it to increase its cash flow by increasing the number of advisers it authorised. The business not only failed to identify who its representatives were, the clients being served and the products being sold, but also failed to ensure the representatives were properly qualified before appointing them as authorised representatives.
“AAA Financial Intelligence was found to have an appalling record that put at risk the quality of advice it provided to retail clients,” said ASIC commissioner Peter Kell.
ASIC also found that AAA:
failed to implement adequate supervision and compliance measures, including advice audits – AAA outsourced its advice audit program to an external party without adequate supervision, failed to act in accordance with its own audit policy and failed to remediate advice and conduct issues when they were identified
failed to ensure that its representatives complied with relevant financial services laws when providing financial advice to retail clients
failed to identify and manage conflicts of interest
failed to act efficiently, honestly and fairly in respect of the templates and guidelines it provided to its representatives, representative audit reports, complaints handling and record keeping
Representatives of AAA have been asked to contact ASIC about the consequences of the licence cancellation to their clients.