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Compliance

ASIC scrutinises 'licensees of last resort'

by Linda Santacruz5 minute read

The corporate regulator has said it is conducting a surveillance of certain dealer groups that financial advisers perceive as “licensees of last resort” as part of its crackdown on poor reference-checking processes.

In March 2017, ASIC warned it will take action against the licensees if they do not start making efforts to prevent rogue advisers from circling the industry.

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Speaking to the parliamentary joint committee on corporations and financial services last week, ASIC deputy chairman Peter Kell said the regulator is also conducting a surveillance of seemingly easy-to-join dealer groups.

“There is a bit of an issue around some licensees being perceived as 'licensees of last resort', where you go if you left other places,” Mr Kell said.

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“I can assure you that is very centre for us.”

Mr Kell declined to name the groups of last resort, but made it clear the issue of poor reference-checking exists across the industry, and not just at major institutions.

He also reiterated calls for more powers to ban those supervising financial advisers.

“We have, as part of our enforcement review, also sought some additional powers. The power to ban senior managers and executives is not nearly as straightforward for us as banning the frontline advisers,” he said.

“Yet, sometimes, these are the people who are actually driving the bus.”

In September last year the Australian Bankers’ Association had created a new protocol intended to encourage banks to check references and share information on bad apple advisers.

Earlier this month, former ASFA chief executive Pauline Vamos questioned whether the new adviser reference-checking protocol is likely to control the spread of dodgy advice, saying some firms will still hire financial advisers even if they are under investigation.

ASIC scrutinises 'licensees of last resort'
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James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

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