The failures identified by the Australian Securities and Investments Commission’s (ASIC’s) internal compliance audit demonstrate advisers need to be their own risk managers and double-check their licensees’ breach reporting, according to Financial Planning Association (FPA) chief Dante De Gori.
ASIC’s Report 515, released earlier this year, found a mismatch between compliance breaches reported by the biggest licensees and those picked up by external auditors or ASIC itself.
The findings prove advisers can no longer rely solely on their licensee, De Gori told the FPA Roadshow in Brisbane.
“In this age of professionalisation, the accountability and responsibility and the advice you provide is equally weighed to you as the individual as it is to the licensee,” he said. “There’s an opportunity to ensure [you] not only rely on the compliance report you receive from the internal compliance team and to encourage you to oversee that yourself.”
The FPA has produced a checklist for advisers to overlay with their licensees’ reports and is distributing the checklist at its roadshows, which are taking place across Australia.
On the topic of reporting, De Gori also stressed the government’s financial intelligence agency, AUSTRAC, had concerns financial advisers were under-reporting suspicious financial activity.
“We are not reporting enough, based on the size of our population and the clients we see, compared with other industries,” he said.
Part of the reason could be advisers may not realise what fits the definition of suspicious financial activity.
“You may have some clients not reporting all their assets or income; they may not be reporting for tax or social security purposes. You have actual obligations, if you’re aware of that, to report it,” he added.
Reports to AUSTRAC must be made without the client’s knowledge, but advisers should tell clients – especially new ones – that they have obligations to report suspicious matters, which can include tax and social security.
Professional Planner is the official media partner of the FPA National Roadshow. The roadshow will continue until the end of June. To register, click here.