Risk Regulatory Updates
/ASIC commences proceedings against BTFM and Asgard over fees for no service
The Australian Securities and Investment Commission (ASIC) has commenced proceedings against three financial services firms in relation to fee-for-no-service and misleading representations of the fees. The firms are BT Funds Management, Asgard and StatePlus.
ASIC is alleging that on over 2,500 occasions between September 2014 to August 2017 Asgard charged 404 customers over $130,000 for financial advice after requests were made for advisers to be removed from product accounts, and after advisers stopped providing advice. BTFM, as trustee of their superannuation products, issue account statements that allegedly had removed the adviser fee line, but added the fee amount to the overall administration fee.
The same occurred across investor directed portfolio services (IDPS) statements issued by Asgard. These fees were charged on eight products, with one being the Asgard-issued IDPS product, and seven superannuation products where BT was the trustee and Asgard was administrator and custodian. The issues have been narrowed down to outsourcing services to a third-party service provider, Genpact Australia, which couldn’t access Asgard’s system. Fees were not able to be removed. Human error was found to be responsible in 11 of the cases.
ASIC takes RI Advice to court over cybersecurity failures
ASIC has commenced legal proceedings against RI Advice for allegations of inadequate cybersecurity systems. The allegations relate to a series of breaches via authorised representatives, including a brute force attack at Frontier Financial Group whereby a malicious user gained access to Frontier’s server and was logged in for over 155 hours.
Another incident involved the reception computer at Wise Financial Planning having ransomware downloaded, encrypting files and making them inaccessible. RI Advice was informed of another incident at Circular Quay where the network was hacked via a remote access port, affecting over 200 client groups.
FASEA exam update - feedback, new course approved
The Financial Adviser Standards and Ethics Authority (FASEA) has revealed which questions advisers are struggling with in their exams, with the regulatory and legal questions tripping advisers up. FASEA has never before offered any feedback, with the revelations that advisers are underperforming generally in this part of the exam, but especially those who are failing the exam.
The main problem areas are testing of advice documentation requirements, the differences between general and personal advice, the Privacy Act and the Anti-money Laundering Act. The FASEA Code of Ethics and the Corporations Act were also challenging areas, FASEA said.
The June exam saw an 84 per cent pass rate, with 2,282 advisers sitting the exam, versus just 470 in April (which had a 79 per cent pass rate). Over 10,000 advisers sat the exam in June, including online exams.
FASEA has approved the Graduate Diploma of Financial Planning for the University of New South Wales. Advisers completing this course will have met the education standard. Two bridging courses now approved include Ethics for Professional Advisers and Behavioural Finance Advice.
