The Australian Securities and Investments Commission (‘ASIC’) is putting the financial advice sector on the notice about meeting requirements for witnessing signatures, after finding issues with advisers failing to correctly witness binding death nomination forms for superannuation benefits.
Binding death nominations forms are an important part of estate planning – in the event of a person’s death, they direct the trustee of the person’s superannuation fund to pay benefits (if any) in accordance with their wishes.
ASIC has become aware of a widespread practice among financial advisers of:
- Witnessing or having staff members witness client signatures on binding death nomination forms without being in the presence of the signatory; and
- Forms being backdated.
Each of these practices fails to comply with the law and may lead to the nominations being invalid and rejected.
The trustee may then choose to exercise its discretion in a manner other than in accordance with the account holder’s nomination, causing delays and uncertainly about the payment of the death benefit.
Australian financial services (AFS) licensees and advisers have professional and legal obligation to comply with the law.
Taking short cuts which result in important forms being invalidated and thereby jeopardizing the account holder’s wishes does not meet the minimum advice and conduct standards expected by ASIC.