The Australian Securities and Investments Commission (ASIC) has imposed additional conditions on the Australian financial services (AFS) licence of New South Wales-based Lionsgate Financial Group, following a surveillance of its advice business.
Lionsgate currently has 103 authorised representatives, after significantly increasing that number over the past three years. This rapid growth appears to have drawn the regulator’s attention and it has now concluded that the licensee has not complying with its general obligations.
Specifically, ASIC was concerned that Lionsgate did not: maintain sufficient resources to carry out supervisory arrangements; properly assess and monitor its representatives’ competence to provide financial services or take reasonable steps to ensure that its representatives complied with financial services laws in providing financial services to clients.
It also concluded that the licensee did not have adequate measures in place to meet its record-keeping obligations.
As a result, ASIC has varied Lionsgate’s AFS licence to require the appointment of an independent expert to review all aspects of the licensee’s arrangements for compliance with its general licensee obligations.
The independent expert will also conduct Lionsgate’s audit program for advice provided by its representatives for a limited period.
“Licensees are responsible for the conduct of representatives that they appoint. It’s very important that they have adequate supervisory arrangements in place to identify and address advice deficiencies quickly”, said ASIC Commissioner Peter Kell.
“It is imperative that licensees ensure that as their businesses grow, they review their compliance arrangements and resource the businesses accordingly.”
The independent expert will report to Lionsgate and ASIC and provide recommendations which Lionsgate will be required to implement.
ASIC will continue to monitor Lionsgate’s compliance via reports from the independent expert for two years.
