ASIC steps in over firm's SMSF advice

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Australian financial services licence holder Anne Street Partners Financial Services (ASP) has agreed to address ASIC concerns relating to the provision of its SMSF advice to clients.

ASIC expressed concerns around the appropriateness of advice provided to clients about setting up a self-managed superannuation fund (SMSF). In particular, there were concerns relating to:

  • the low balance with which SMSFs were established
  • the advice not being sufficiently tailored to the needs of each client
  • inadequate comparison of clients' existing superannuation to the recommended SMSF
  • inadequate consideration of suitable alternative strategies that would have met clients' needs, and
  • inadequate consideration of clients' long-term retirement planning objectives.

ASIC was also concerned about the management of conflicts of interest, because some advice resulted in referrals to related ASP entities.

ASP has cooperated fully with ASIC's inquiries and ASIC acknowledged the constructive action taken by ASP to address its concerns. The firm has agreed to engage an independent expert who will review, assess and make recommendations regarding:

  • the SMSF advice provided by ASP to clients
  • the adequacy of ASP's conflicts management arrangements, and
  • ASP's measures for monitoring and supervision of representatives.

The independent expert will report to ASIC and ASP over the next 18 months to ensure ASIC's concerns are addressed.

ASP has already implemented a number of measures to improve its advice process and to ensure clients receive good quality financial advice. These include:

  • improvements to its risk profiling tool and advice template documentation
  • implementation of a new client relationship management system, and
  • ensuring all representatives receive specialised SMSF training and are competent to provide SMSF advice.
  • alleycat on 5/09/2013 5:45:22 PM

    I wonder when ASIC will do the same kind of investigation into the accounting profession?

    They might even find some are providing financial advice without an AFSL or as an Authorised Representative.

    It's OK though isn't it because their governing bodies keep telling everyone how professional they all are !!

  • Stephen on 5/09/2013 4:51:46 PM

    Interesting article. I wonder how many complaints were taken for ASIC to make them look at ASPs procedures, etc. Considering that ASIC is understaffed and has such a wide regulatory jurisdiction, was it pure coincidence that they found ASP out? Which ever method was used, it is very pleasing to see that ASP now has its clientele's best interests in mind.

    What concerns me is the mention of the low balance of the SMSFs that were being created. Is there an industry standard that sets the proper amount as a minimum? Sometime ago, $200k was a suggested minimum but administration costs has come down because of competition which is open to dispute. Would a couple with $50k between them be considered suitable for an SMSF especially if both has significantly different views on risk?

  • WPS on 5/09/2013 4:07:50 PM

    Only their SMSF Advice?

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