ASIC orders AFSL holder to review SMSF advice

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AFSL holder Sentry Financial Services has agreed to address concerns raised by ASIC about SMSF advice provided to clients by its corporate authorised representative, Connect Financial Services.

After undertaking surveillance of Sentry, ASIC raised a number of concerns about SMSF advice provided to clients by Connect that may have not been compliant.

These included the requirement for a Statement of Advice to be given to the client, the requirement to act in the best interests of the client and provide appropriate advice, and the product replacement disclosure requirements when recommending the replacement of one financial product with another.

ASIC was also concerned that Sentry may not have complied with its obligations as an AFSL holder to properly monitor and supervise Connect and ensure it was adequately trained and competent to provide SMSF advice.

As a result Sentry has agreed to:
  • Write to 158 clients that received an SMSF promotional letter from Connect to inform the clients that the letter contained personal financial advice and to offer the clients a review so that any necessary remedial action can be undertaken, and
  • Engage an independent expert to review 17 client files of Connect that involved the establishment of an SMSF and make recommendations regarding any deficiencies identified and, where relevant, recommend remediation and/or compensation for the client.
The expert will then report to ASIC and Sentry to ensure the concerns are properly addressed.

ASIC’s senior executive leader Louise Macaulay said running an SMSF can be complex and consumers need to be adequately protected.

“Establishing an SMSF is one of the most significant steps an investor can take in relation to their retirement savings. It involves taking greater personal responsibility for retirement investments,” she said. “Those advising on SMSFs should be offering personal financial advice which considers the consumer's individual circumstances and makes sure the advice adequately meets their needs.”

ASIC said that Sentry has cooperated fully with the inquiries and the regulator acknowledged the constructive action taken by the ASFL holder to address the concerns.