Risk Regulatory Update
/Labor reiterates commitment to experience pathway for advisers
Stephen Jones, shadow minister for financial services, spoke on a webinar hosted by the Stockbrokers and Investment Advisers Association (SIAA) and reiterated that if Labor won the election, it would quickly introduce the experience pathway for advisers who have been in the industry for 10 years or longer.
“We want to put in place a sensible, efficient recognition of prior learning arrangement so that if you’ve been doing the job for ten years, you can continue to be a licensed adviser provided you haven’t got any black marks,” Jones said.
AFCA creates merit system for complaints, halves processing time
The Australian Financial Complaints Authority (AFCA) has developed a new system to deem the merits of complaints. The merit assessment process means the assessment and exclusion of complaints where no error or financial loss has been recorded.
After a three-month trial in 2021, AFCA made the merit assessment permanent. Productivity has been improved as a result, effectively halving processing time for the cases not excluded, with the fees charged 75 per cent lower for companies.
Changes to AFSL reporting of new adviser hires
The Australian Securities and Investments Commission (ASIC) has made changes to the reporting required by Australian financial services (AFS) licensees when a new financial adviser is hired. Licensees are no longer required to flag the professional year arrangement between the advisory firm and the newly-hired advisers. Licensees must still notify the regulator if they grant a new adviser accelerated professions through quarters 1 and 2, and when they issue a final completion certificate of the new adviser’s professional year.
Previously, licensees had o inform the former Financial Adviser Standards and Ethics Authority (FASEA) within 30 days of a new financial adviser starting their professional year.
ASIC defines a professional year is one year of full-time professional adviser work, the equivalent of 1,600 hours, of which 100 of these must be structured training before a new financial adviser is fully qualified.
RI Advice falls short on cyber risks
The Federal Court has found that RI Advice breached its licence obligations by not acting efficiently and fairly when it failed to have adequate risk management systems in place in regard to its cyber security risks.
ASIC alleged that a number of cyber incidents occurred at financial advisory practices of RI Advice between 2014 and 2020, including the possible compromise of confidential and sensitive personal information of several thousand clients. RI Advice has been ordered to pay $750,000 to ASIC’s costs.
RI Advice was handed a $6 million penalty in February for failing to take reasonable steps to ensure an adviser of theirs, John Doyle, provided appropriate financial advice, acted in his clients’ best interests, and put client interests ahead of his own.
NAB enters EU with AUSTRAC after ‘possible non-compliance’
National Australia Bank (NAB) has entered into an enforceable undertaking (EU) with financial crimes regulator AUSTRAC. AUSTRAC launched an investigation into NAB’s compliance with AML/CTF laws in June 2021 after concerns of ‘potential serious and ongoing non-compliance’ in regards to customer identification procedures and ongoing customer due diligence.
The EU requires NAB to complete a remedial action plan by 31 December 2024, with the appointment of an external auditor who will provide a final report by 31 March 2025.
