ASIC accepts another enforceable undertaking

ASIC accepts another enforceable undertaking

ASIC accepts another enforceable undertaking

Editor: In 2012, in response to the growth in SMSFs, ASIC established the SMSF Taskforce, and the Taskforce continues to examine high-risk and emerging SMSF issues such as property spruiking to SMSFs, unlicensed conduct, and false and misleading advertising of SMSFs.

ASIC has accepted an enforceable undertaking (EU) from the holder of an Australian financial services (AFS) licence (Ascentiv Group Pty Ltd (Ascentiv), based in Mascot, New South Wales), and its sole director, Mr Chris Pappas.

An ASIC surveillance of Ascentiv identified concerns about the appropriateness of Ascentiv’s advice to clients to establish or use an SMSF.

In particular, ASIC had concerns about Ascentiv’s failure to:

• Ensure its representatives provide SMSF advice that was appropriate and in the best interests of their clients;
• Adequately manage conflicts of interest;
• Adequately monitor and supervise its representatives; and
• Ensure its representatives were adequately trained and competent to provide SMSF advice.

ASIC’s surveillance also found that Ascentiv failed to provide its clients with clear and concise statements of advice.

Instead the statements of advice were very lengthy and difficult to understand, making it difficult for Ascentiv’s clients to make informed decisions about the advice provided to them.

Under the EU, Ascentiv has agreed to cancel its AFS licence and write to some of its existing clients to inform them of the EU and the clients’ rights to dispute resolution.

ASIC Deputy Chairman, Peter Kell said that it is important that the advice provided by financial advisers to their clients is appropriate for those individuals’ needs and circumstances’.

“ASIC further expects… AFS licensees that provide SMSF advice to adequately monitor their representatives and have processes which lead to the provision of high quality SMSF advice. ASIC will intervene where it finds the quality of advice provided by advisers and the supervision of those advisers by the licensee to be lacking”, Mr Kell said.

ASIC released two information sheets in July 2015 to improve the quality of advice provided by advisers on SMSFs:

• Information Sheet 205: Advice on self-managed superannuation funds: Disclosure of risks (INFO 205); and
• Information Sheet 206: Advice on self-managed superannuation funds: Disclosure of costs (INFO 206).

Ref: ASIC media release 16-149MR, 18 May 2016