Findex enters EU following misconduct

In a statement today, ASIC announced the enforceable undertaking of Financial Index Australia Pty Ltd (FIA), part of Findex Group Limited.

The EU comes after ASIC found FIA had moved clients from their existing product into a more expensive FIA branded product, without sufficient explanation or justification.

The EU was offered following surveillance by ASIC, which looked at a number of FIA's policies, procedures and client advice files.

Through its surveillance, ASIC identified a number of concerns in relation to FIA's financial advice business, including out-of-date policies and procedures, deficiencies in the file audit process, and insufficient information being provided to clients who were being moved into new products.

The surveillance conducted by ASIC found that a number of FIA's policies and procedures were deficient and referred to old sections of the Corporations Act 2001.

Further, FIA's Adviser Incentive Scheme was likely to encourage representatives to switch clients from existing third party products to FIA's own branded product.

Meanwhile, the majority of clients whose files were reviewed by ASIC were moved from their existing third party product to a more expensive FIA branded product without adequate justification or explanation as to why the move was likely to leave the client in a better position.

ASIC said that in the majority of cases where clients were recommended to switch from their existing third party product to a FIA branded product, the SOAs provided to clients did not include the additional information required when an adviser recommends replacing one product with another.

For those clients who were recommended to switch, there was a lack of detailed inquiries into the client's personal circumstances, financial needs and objectives, ASIC said.

Last year, Findex and FIA were penalised for using the terms '‘independent’ and ‘non-aligned’ on websites. Findex responded to the penalty claiming it was not the group's intention to mislead clients.