AFS licensee feels wrath of regulator

ASIC has found flaws at a business it decided to investigate after the firm hired ex-representatives of a failed financial planner.

The regulator announced that it had imposed conditions on the AFSL of Suncorp-owned Guardian Advice due to “deficiencies in the advice it provided to retail clients”, saying it was concerned that the life insurance company “was not complying with its general obligations as an AFS licensee”, including failing to properly supervise its authorised representatives.

The investigation found instances where there was not a demonstrated reasonable basis for advice provided. It also found Guardian Advice did not have adequate arrangements in place to ensure it was complying with its general obligations as an AFS licensee.

One of ASIC’s specific concerns was that Guardian Advice “did not properly assess and monitor its representatives’ competence to provide financial services”.

ASIC said its investigation followed Guardian Advice’s appointment of ex-representatives of AAA Financial Intelligence and AAA Shares, whose AFS licences were cancelled in 2013.

The regulator said it wanted to ensure Guardian Advice had adequate monitoring and supervision processes to deal with these representatives.

Under the conditions imposed by ASIC, Guardian Advice must appoint an independent consultant to review its compliance and develop a plan to rectify deficiencies. The expert will report regularly to ASIC over the next two years on Guardian’s implementation of the plan.

Guardian Advice has 257 authorised representatives. ASIC acknowledged the “cooperative and constructive approach” the firm has taken in response to its concerns.

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