FSCP warns adviser over SOA failings

After an almost three-month gap between determinations, the Financial Services and Credit Panel (FSCP) has delivered its second ruling in less than a week.

The latest decision relates to a relevant provider, anonymised as “Mr L”, who the FSCP found to have breached the Corporations Act because he relied on statements of advice (SOA) from a third party.

The sitting panel opted to issue a warning to Mr L, however, the FSCP took no further action.

“The sitting panel has issued a warning under s921T(1)(b) of the Corporations Act 2001 to the relevant provider because the relevant provider contravened s946A(1) of the Corporations Act by failing to give a statement of advice to a client,” the FSCP said.

“The circumstances of the contravention were that between February 2022 and November 2022, the relevant provider gave records of advice to clients in reliance on statements of advice that had been given to the clients by a different providing entity.”

While the warning is not required to be displayed on the Financial Advisers Register (FAR), copies of FSCP warnings are also given to both the Australian Securities and Investments Commission (ASIC) and the relevant provider’s licensee.

The determination follows the FSCP reprimanding an adviser for failing to ensure that clients kept their existing insurance until their new insurance was in place, among other issues.

The FSCP sitting panel determined that the relevant provider “failed to accurately identify the clients’ goals, failed to make reasonable inquiries to obtain complete and accurate health information for one client, failed to consider the insurance information in relation to one client, and failed to consider the risk profiles of the clients”.

It also found the SOAs did not address all of the clients’ goals and did not “ensure that the clients kept their existing insurance until their new insurance was in place”.

Additionally, the relevant provider failed to ensure that the SOAs they provided set out the “potential benefits, pecuniary or otherwise, that may be lost by implementing the advice”, as well as any “significant consequences of implementing the advice”.

The panel ordered that the relevant provider receive specified supervision from an independent compliance professional at their own cost and audit the next 10 pieces of advice that they intend to present to a retail client, as well as the next five pieces of insurance advice if there is no insurance advice included in the first 10.

The relevant provider is then required to provide the independent compliance professional’s findings to ASIC.