ASIC recently sounded a warning to financial advisers outlining the major issues it aims to crack down on. Should mortgage brokers take notice?
Speaking at the AFA Conference this week, ASIC commissioner Peter Kell
highlighted the areas of concern that ASIC wants advisers to focus on to keep themselves out of trouble.
Kell began by pointing out that ASIC’s program of visiting new licensees was set to continue. He noted that, while the regulator has been impressed with the level of FoFA readiness amongst new licensees, there were several who still had some way to go. With the credit licensing regime still in its early days, most brokers fall into the category of relatively new licensees the regulator has vowed to keep an eye on.
Internal audits and reviews
When it comes to preventing ASIC action in the future, Kell noted that it’s vital to follow up on any issues that are identified when your business conducts a review or internal audit, as all too often these issues get swept under the carpet.
“When audits are conducted by the licensee, we’re often finding that issues have been identified –problems, compliance weaknesses – nothing in most cases that is going to create any problems, but need to be addressed early before they lead to bigger problems down the track,” he said.
“If you undertake a review, internal audit or compliance program within your firm, it’s very important that you follow up and implement change addressing the situation, and take appropriate remedial action.”
He noted that there have been a couple of recent cases where ASIC has had to step in and deal with licensees who have failed to follow up on issues identified in audits.
Worryingly, Kell noted that ASIC continues to see some “inappropriate switching” of life insurance policies “resulting in detriment to consumers, where we frankly can’t see why the policy’s been changed”.
“In some cases unfortunately there have been very poor outcomes for the consumer,” he added.
This issue may have greater impact on financial advisers, but mortgage brokers looking to diversify into risk products should take note.