Tag financial services

What is an Investigation?

As the new breach reporting obligations are about to commence from 1 October 2021, ASIC has provided an explanation of what constitutes an investigation into a possible breach and what should trigger the start of a 30-day window before investigations become a “reportable situation”.

Questions have been raised as to when an investigation into a possible breach starts amid concern that too many scenarios would trigger an investigation.

ASIC has outlined several situations in RG 78 that aren’t considered starting points.

ASIC has stated that the “mere receipt of a detective control” such as a disclosure from a whistleblower, a complaint, or a regulatory request is not an investigation that needs to be reported.

Further to this, “preliminary steps and initial fact-finding inquiries into the nature of the incident”, are not considered starting points, as long as they are completed over a short time frame and as an initial response.

ASIC also advised that, “business as usual inquiries such as routine audits, quality assurance monitoring, or other internal compliance review processes, are only reportable to us if they are triggered by an incident or assess, or will be, assessing a possible breach of a core obligation”.

These explanations also include four example scenarios − including fee for no service issues and complaints, and case studies designed to illustrate when an investigation is triggered and subsequently becomes reportable.

An investigation will now become reportable on day 31 of the investigation, after which licensees will have another 30 days to lodge a report to ASIC.

Where are your priorities?

Originally published | 16th September 2016

Set out in s961J of the Corporations Act, is a rule that many advisers might gloss over. It is the conflicts priority rule.

This rule is similar in nature to the previous obligation to provide “appropriate advice”. The priority rule expressly requires an advice provider (Financial Adviser) to prioritise the interests of the client if the financial adviser knows, or reasonably ought to know; when they give the advice that there is a conflict between the interests of the client and the interests of:

  • The financial adviser; or
  • The financial adviser’s Australian Financial Services (AFS) licensee.

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Your Objectives, should you choose to accept them!

Originally published | 23rd September 2016

What do most compliance managers, or quality assurance managers, question when discussing the quality of advice?

Does the recommended strategy meet the client’s goals?

The invariable discussion is that in the fact-finding stage of advice, you the adviser, must document the client’s goals. These goals must be specific, measurable, achievable, realistic and timely.

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Evolution of Legislation

Originally published | 2nd October 2017

A lot of advisers I speak with still long for the good old days where advice seemed easier and the compliance burden was less.

Unfortunately, because of the sins of a few, our legislation has had to evolve to protect not only the client, but ourselves.

That’s the nature of a mature society as well, where they can evolve their legislation, and their constitution, to meet the demands of the current day.

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Ethics in the face of Unethical Behavioural

Originally published | 17/02/2019

It is interesting that over the last couple of weeks I have read the diatribes of advisers who are bemoaning the changes that will come about because of the Royal Commission. It is interesting that we have yet to fully hear from the Australian Financial Services Licensees (AFSL) that have been caught up in so much of the misconduct.

The reason why we haven’t heard from them, in my opinion, is because they don’t care. These AFSLs are vertically integrated so the advice component is not important to them. The only thing important to them is selling products. And this leads to unethical behaviour.

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