ASIC Seek To Clarify Regulatory Approach To Code
In news from the FPA’s Professionals Congress in Melbourne, ASIC commissioner Danielle Press said ASIC has no intention of checking whether licensees are monitoring their representatives’ adherence to FASEA’s Code of Ethics or even whether licensees have systems in place to do so.
Professional Planner reported Press as saying “Let me be clear, on the 2nd of January 2020, I’ll have much better things to do than come knocking on your door to make sure you’ve got a system in place. I’m just saying we don’t have a work plan that says we are going to do this in January, February or March. You’ve got time to make sure it’s going to work”.
ASIC has regulatory oversight for the statutory Code of Ethics that will apply from January 1 next year, but Press said “We do not have plans to go into licensees individually and check whether individual advisers are adhering to the code. We don’t have the resources or the time to do that and we believe you need time to monitor the code”
Press’s comments could be seen as indicative of the “facilitative approach” ASIC has signalled it would take in regard to monitoring the code. Licensees were still expected to take “reasonable steps” to ensure advisers are compliant and ASIC will act on breach notices, but Press recognised that FASEA still hasn’t completed its guidance and that questions remain relating to how aspects of the code will apply in practice. “Reasonable steps does give you some time to check… It takes into consideration the difficulties we are currently experience around the guidance,” she said.
Speaking at the same event FASEA chief executive, Stephen Glenfield said the FASEA code does not seek to ban particular forms of remuneration, nor does it determine that particular forms of remuneration are always an actual conflict. For in in depth XY Adviser interview with Glenfield regarding the FASEA code, it’s implementation and the subjects of compliance and conflicted remuneration click on one of the links below:
Controversy At The Congress
The FPA congress included controversy yesterday when it hosted banned Queensland adviser James Cribb for a session on dealing with ASIC. Cribb and his lawyer Rhett Das were guest speakers at the event and their presence was aimed at thelping explain how Cribb came to be banned and what he wishes he'd done differently.
Cribb was banned in July last year for providing inadequate financial advice to his SMSF clients, regarding using their SMSFs for property purchases. The issue was even though some clients came to him asking specifically for SMSF advice, he still was obliged to say no if he thought an SMSF wasn't in the best interests of the client.
Although Cribb wasn't paid by the FPA to attend, and as Das explained - the intention of inviting him to the panel was not to glorify or shame him, but to provide a learning experience to the attendees, there were several advisers who expressed dismay that Cribb was given a platform.
Court Finds Dover Client Protection Policy False, Misleading or Deceptive
The Federal Court of Australia has found Dover Financial Advisers engaged in false, misleading or deceptive conduct. A statement by ASIC said the Federal Court of Australia has found Dover Financial Advisers Pty Ltd (Dover) engaged in false, misleading or deceptive conduct. The conduct in question involved publishing false, misleading or deceptive statements in a “Client Protection Policy” (Protection Policy) between around 25 September 2015 and 30 March 2018.
In the judgment, Justice Michael O’Bryan found that the title of the Protection Policy “was highly misleading and an exercise in Orwellian doublespeak. The document did not protect clients. To the contrary, it purported to strip clients of rights and consumer protections they enjoyed under the law”.
The Protection Policy was provided to 19,402 clients with statements of advice by representatives of Dover. The Protection Policy purported to be 'designed to ensure that every Dover client get [sic] the best possible advice and the maximum protection available under the law’.
Circumstances where the policy was false, mis-leading and deceptive included where:
- it did not ensure that clients received the maximum protections available under the law;
- it purported to remove or dilute the protections that clients would otherwise have had under the law;
- it sought to prevent clients from making a claim against Dover and its authorised representatives on the basis that advice could not be understood.
The Court also found, as a matter of fact, as Dover’s sole director, Key Person named on Dover’s Australian Financial Services Licence and a Responsible Manager during the relevant period, Terry McMaster, was knowingly concerned in Dover’s contraventions and that it was satisfied it was appropriate to make a declaration that Mr McMaster had contravened section 12DB(1)(i) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).