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Regulatory Oversight and the Importance of Compliance: A Case Study on National Advice Solutions

Updated: Oct 30, 2023


In this blog, we delve into the recent ASIC action against National Advice Solutions, highlighting the crucial importance of regulatory compliance in the financial services sector.


Learn how 62 Fund Services can be your compliance superhero, offering tailored solutions to navigate the complex landscape of Australian financial regulations.


Introduction

In a recent development that underscores the critical importance of regulatory compliance in the financial services sector, the Australian Securities and Investments Commission (ASIC) revoked the Australian Financial Services Licence (AFSL) of National Advice Solutions. The regulatory body also imposed a 10-year ban on the two responsible managers prohibiting them from offering financial services.


The Core Issues

ASIC's investigation revealed that National Advice Solutions failed to meet the fundamental obligation of providing financial services that are efficient, honest, and fair. The company employed a "layered advice" strategy, which compartmentalized financial advice into pre-defined topics, irrespective of the individual client's unique circumstances, objectives, or requirements. This approach not only breached financial services laws but also resulted in clients receiving costly, generic advice that was misaligned with their specific needs.


For instance, clients were initially advised on their superannuation, often to the exclusion of insurance considerations—even when insurance premiums were being paid from existing superannuation accounts. ASIC deemed this separation of superannuation and insurance advice as fundamentally flawed, given the intrinsic linkage between the two financial products.


Governance and Oversight Failures

Further scrutiny revealed that National Advice Solutions was also deficient in monitoring and supervising its authorized representatives, thereby failing to maintain the requisite competence to offer the financial services covered under its AFSL. The two responsible managers, who were part of the Compliance Committee, were found to be complicit in these systemic failures.


The Implications and ASIC's Stance

ASIC's actions against National Advice Solutions and its responsible managers are part of a broader initiative to elevate industry standards across the financial advice sector. The regulatory body aims to ensure that financial service providers operate within a framework that prioritizes client interests and adheres to regulatory and legal obligations.


Financial advisers need to be careful if they seek to give separate financial advice to clients on different products – for example superannuation v insurance – unless they can show that the separation is in the client’s interests and takes their circumstances into account (if its personal advice).


How 62C Fund Services Can Help

62C Fund Services, is a division of 62 Consulting and has extensive expertise in Australian Financial Service Licences and can assist in navigating the complexities of regulatory compliance. Our team of experts specializes in:

  • Compliance Audits: Conducting thorough audits to identify potential areas of non-compliance and offering actionable recommendations.

  • Operational Risk Management: Implementing robust risk management strategies to ensure that financial services are provided efficiently, honestly, and fairly.

  • Governance and Oversight: Establishing strong governance structures, including compliance committees, to monitor and supervise authorized representatives effectively.

  • Strategic Advisory: Providing tailored advice that aligns with a client's unique circumstances, thereby avoiding the pitfalls of generic, templated advice.

  • Ongoing Monitoring: Offering continuous oversight and updates to ensure that companies remain compliant with evolving regulations.

By partnering with 62 Fund Services, financial service providers and 62C Fund Services authorised reps can significantly mitigate the risks associated with regulatory non-compliance, thereby safeguarding both their reputation and their clients' interests.

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