Enforceable undertaking from advice firm and its director

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ASIC has accepted a voluntary enforceable undertaking (EU) from Wealthsure, Wealthsure Financial Services and the former CEO of both companies, Darren Pawski.

The EUs follow an ASIC investigation that started in December 2011. The investigation reviewed Wealthsure's compliance systems and allegedly identified recurring compliance deficiencies, despite previous regulatory intervention in 2006.

ASIC is concerned about Wealthsure's commitment to compliance being inadequate.

“This has resulted in a business culture that has not given sufficient priority to risk management, with consequent detrimental outcomes for consumers”, the regulator said.

ASIC is concerned that Wealthsure's ‘lite touch’ approach to compliance has resulted in:

  • a failure to regularly or consistently review its representatives' financial product advice
  • a failure to subject its representatives, with a higher risk of compliance breaches, given their compliance history, associations or business model, to more regular random audits
  • a failure to conduct robust investigations into non-compliant representative conduct or give appropriate consideration to breaches
  • a failure to systematically ensure appropriate sanctions or other consequences for non-compliant representative conduct
  • a failure to provide its representatives with robust documented policies and procedures, and
  • a failure to employ adequate processes for identifying and addressing the competence and training needs of its representatives.

The EU requires Wealthsure and Wealthsure FS to complete a program to address its failure to foster and maintain a proper commitment to its compliance obligations. The program will be reviewed by an independent expert, who will report to ASIC regularly until 2018.

Wealthsure has replaced managing director, Darren Pawski, who stepped down from his position. Both Wealthsure and Wealthsure FS must also maintain a majority of independent non-executive members on their boards.

ASIC's investigation found that Pawski was "instrumental" in Wealthsure's multiple compliance failures. Under the EU, Pawski has agreed to permanently refrain from:

  • exercising or attempting to exercise any influence over Wealthsure or Wealthsure FS's shareholders or new senior executives
  • providing financial services
  • having any involvement or exercising any influence in key decisions of an AFS licensee
  • taking part in the management of any AFS licensee
  • having any involvement or exercising any influence in any key decision-making by Wealthsure, as it relates to credit activities, and
  • taking part in the management of Wealthsure or Wealthsure FS, as it relates to credit activities.

"ASIC notes Wealthsure, Wealthsure FS and Mr Pawski have fully cooperated and worked constructively with ASIC during its investigation. They have been proactive in their dealings with ASIC in proposing and implementing solutions to address our concerns," said ASIC.