April 14, 2024
ASIC’s January activity hints at increased enforcement action

The Financial Services and Credit Panel (FSCP) has made its latest decision on a case regarding Statements of Advice (SOA) and rolling over superannuation funds.

While the panel found the case breached compliance with the Code of Ethics, it did not believe it had breached the Corporations Act. As a result, no action was taken against the relevant provider. 

In the case, the relevant provider had given advice in an SOA to a couple recommending that they rollover their superannuation funds from their existing fund to a new product that would cost a total of $1,960 per annum more.

It was referred to the panel as there were concerns that the relevant provider had failed to demonstrate how the more expensive product could meet the couples’ investment preferences to invest their super in a suitably-diversified product.  The product had been described in the SOA as “having low fees and being cost effective”.  

It particularly referenced sections of the Corporations Act 961B, around acting in the best interest of the client, and 961G which discusses how advice must be appropriate to the client.

The FSCP’s outcome stated the relevant provider had failed to comply with Standard 5 of the Code of Ethics which requires an adviser to ensure any recommendations provided are appropriate to a client’s individual circumstances and the client understands the advice.

However, it did not believe the relevant provider had contravened the Corporations Act based on the SOA.

This was the third outcome where no action had been taken and the second where there had a breach of the Code of Ethics but not of the Corporations Act.


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