Centrepoint Alliance, owner of Professional Investment Services, hopes a new management team will be able to turn around the beleaguered dealer group after the regulator expressed concerns over compliance.

An independent expert will monitor the financial advice given by Professional Investment Services (PIS) representatives for the next nine months under standards set out by the Australian Securities and Investments Commission (ASIC) in a major enforceable undertaking.

Centrepoint Alliance managing director and PIS chief executive John de Zwart was not immediately available for comment, with a spokesperson indicating that he was at a team offsite with the rest of a the newly appointed group executive team until Friday.

However, in a statement PIS said it was “pleased to announce the appointment of an independent expert”, with de Zwart calling the enforceable undertaking “a key milestone in our journey to become the leading independent advice services group in Australia”.

While PIS is no stranger to regulator scrutiny following an enforceable undertaking and the banning of one of its advisers in 2012, de Zwart said the company had voluntarily entered into this surveillance program.

“Following the completion of our enforceable undertaking in March 2012, Professional Investment Services has voluntarily entered into this monitoring program. The team has made good progress in changing the culture, improving the training, enhancing the systems and processes to improve the quality of advice provided to our clients,” de Zwart said.

“We have undertaken a complete redesign of our compliance processes, training, recruitment and governance along with a suite of new advice tools and a series of key appointments, which are all part of our ongoing strategy.”

PIStory with the regulator

The first monitoring program follows the conclusion in March 2012 of an enforceable undertaking ASIC accepted from PIS in December 2010. The regulator had concerns that compliance and audit functions required further work. The independent expert will report back to ASIC each quarter on the progress being made by the dealer group and its 527 advisers.

According to ASIC, the monitoring will test compliance of PIS’s personal advice with regulatory requirements, its ability to identify poor advice and the effectiveness of its advice audit and pre-vet functions.

“ASIC is focused on ensuring advisers do the right thing, so we will require further compliance reviews if we have concerns that advice standards are not consistently at appropriate levels,” said ASIC deputy chairman Peter Kell.

“ASIC recognises the positive response of PIS to the concerns identified and we encourage all financial services licensees to undertake robust testing of their processes to ensure consumers get high quality advice.”

In October last year ASIC banned former PIS-authorised representative Alec Khoo for three years, finding he had failed to comply with financial services laws while providing financial advice to clients of his business, known as Alec Khoo and Associates.

At the time, PIS chief executive Peter Walther said while the ban was regrettable, the company was not surprised by the decision.

Centrepoint Alliance bought PIS in December 2010 and Walther was appointed chief executive eight months later. However, he resigned in April this year for what the company called personal reasons.

Another reshuffle was announced this week but, intriguingly, the new group executive team is still nameless, despite queries from Professional Planner.

 

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