Super advisers under ASIC scrutiny

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January 19 2018
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The investments regulator has banned a financial planning adviser after she fabricated clients’ signatures, and has put the entire super advice sector “on notice” for lapses in signature requirements.

Commonwealth Financial Planning’s Kimberley Holgate has been banned for five years following the Australian Securities & Investments Commission (ASIC) findings that she had copied clients’ signatures from documents on file for new documents.

Additionally, the adviser was found to have failed to inform her clients that the products she was suggesting also entitled her and her employer to financial benefit.

Speaking yesterday (18 January), ASIC said Ms Holgate also: “Did not act in the best interests of her clients when advising they roll over their existing super to a new product issued by Colonial First State, a related entity of the Commonwealth Bank of Australia, [and] did not act in the best interests of her clients by advising them to cancel existing insurance policies and apply for personal insurance issued by CommInsure.”

The commission said Ms Holgate’s super advice did not provide “any improvement” to her clients’ financial positions.

Ms Holgate was a representative of Commonwealth Financial Planning from January 2014 to October 2015.

Licensees who ‘cut corners’ also in ASIC’s sights

ASIC today (19 January) said it is putting the financial advice sector “on notice” about the requirements for witnessing signatures for binding death benefit nomination forms for superannuation benefits.

“ASIC has become aware of a widespread practice among financial advisers of witnessing or having staff members witness client signatures on binding death nomination forms without being in the presence of the signatory. In other cases, forms have been backdated. Each of these practices fails to comply with the law and may lead to the nominations being invalid,” ASIC said.

Acting chair, Peter Kell added that unethical and inappropriate practices around binding death benefit nomination forms can trigger “very poor consumer outcomes”. He said advisers, licensees and staff who are slipping up should “consider this a final warning”.

“AFS licensees have ultimate responsibility for the conduct of their representatives and need to effectively monitor and supervise their representatives,” Mr Kell said.

ASIC explained that the importance of correct execution of binding death nomination forms lies in the fact that the form dictates the super fund’s trustee to pay the benefits in line with the account holder’s wishes.

“Improper witnessing of the form can make it invalid, resulting in the death nomination being rejected. The trustee may then choose to exercise its discretion in a manner other than in accordance with the account holder's nomination, causing delays and uncertainty about the payment of the death benefit,” ASIC continued.

“Australian financial services (AFS) licensees and advisers have a professional and legal obligation to comply with the law. Taking shortcuts which result in important forms being invalidated and thereby jeopardising the account holder's wishes does not meet the minimum advice and conduct standards expected by ASIC.”

The regulator called on licensees to “proactively address” any systemic issues caused by advisers’ improper practices, and to remediate customers where necessary.

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