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ASIC identifies concerns with advice from financial planning group

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Media Release

Published on

Distressed investors will welcome ASIC’s announcement that it will impose additional licence conditions on Australian Financial Services Limited (AFS) after a six-month surveillance of the company.

The AFS’ website indicates that the group represents approximately 200 authorised representatives around Australia with approximately $6 billion in funds under management.

Slater and Gordon lawyer Odette McDonald deals daily with investors who have lost their savings as a result of inappropriate advice, such as being placed in an investment product unsuited to their risk profile, or being encouraged to take out an investment loan that they cannot afford to service.

“In many instances, investors are unaware that there was a problem with the advice that they have received, even advice that ultimately led to a loss, until those problems were subsequently identified by a third party, such as an accountant or a new financial advisor.” she says.

“ASIC’s scrutiny of how some planners operate is good news for investors who do not have an independent third party looking at their accounts.

“We hope that pre-emptive action of this kind will help protect retail investors from financial advisors that act with anything less than the utmost professionalism, including ensuring that they have appropriate systems to ensure that their advisors are acting appropriately.”

ASIC’s concerns with AFS included the management of conflicts of interest on advice to clients to switch investments to financial products associated with the licensee, its dispute resolution system, the monitoring and supervision of authorised representatives and staff, compliance with the requirements to have a reasonable basis for advice provided to clients and to provide appropriate advice when recommending replacement of one financial product with another.

The additional license conditions will also see AFS voluntarily engage an independent expert to review and make recommendations regarding its compliance practices, processes and resources, and provide recommendations about compensation to clients where appropriate.