Self-licensed financial planning business, Moneywise Securities on New South Wales’ Central Coast, is in trouble with the Australian Securities and Investments Commission for not adequately considering the specific needs of clients when recommending certain investment strategies.
The regulator has imposed additional licence conditions on Moneywise Securities due to concerns over advice provided to clients about establishing margin-lending facilities and self-managed superannuation funds.
ASIC’s senior executive leader, Louise Macaulay, said financial advisers needed to be “particularly diligent in ensuring the financial product is suitable to the specific needs of the client” when advising on more complex products such as margin loans and SMSFs.
As part of the additional conditions being imposed on Moneywise Securities, it must appoint an independent expert to review, assess and make recommendations regarding the adequacy of the group’s conflict-management arrangements, measures for monitoring and supervising authorised representatives and the adequacy of its internal dispute-resolution system.
Consultation and surveillance
The regulator’s latest action follows its release of a new SMSF consultation paper on September 16.
The proposed guidelines, designed to improve the quality of advice given to investors, are contained in Consultation Paper 216 Advice on self-managed superannuation funds: Specific disclosure requirements and SMSF costs.
In releasing the paper, ASIC deputy chairman, Peter Kell, said advice on SMSFs fell well short of the regulator’s expectations.
“Our recent surveillance of the sector found that advice was not up to a standard we would like, so we will continue to work with the industry to ensure investors receive good quality, tailored advice from their accountant and financial planner,” he said.
The consultation paper also looks at the appropriate level of resources consumers should have before setting up an SMSF.
ASIC commissioned Rice Warner to examine the minimum cost-effective balance for SMSFs when compared with super funds regulated by the Australian Prudential Regulation Authority. CP 216 includes Rice Warner’s report: Costs of Operating SMSFs. ASIC is seeking feedback on Rice Warner’s findings and on the costs associated with setting up, running and winding up an SMSF.
