Risk Regulatory Update

ASIC bans director and companies for unpaid remediation

Financial adviser and company director Peter Gribble has been banned by the Australian Securities and Investments Commission (ASIC) from operating a financial services company after he failed to pay consumers $2.5 million relating to complaints.

Gribble was the sole director of former Australian financial services (AFS) licensee, Qsmart, and a director of AFS licensee, Quantum. Both companies under Gribble’s directorship refused or failed to pay determinations made by the Australian Financial Complaints Authority (AFCA). In 2020, AFCA made seven determinations against the two companies in response to complaints regarding unauthorised trading and disclosure failures, inappropriate advice and other misrepresentations by credit representatives.

ASIC said Gribble thought the AFCA determinations were up for negotiation (they are not) and had sought to persuade some complainants to accept less money than the determination. Gribble is not banned from seeking authorisation to provide financial advice and has a right to appeal.

Court dismisses Mayfair 101 appeal

The Federal Court has dismissed an appeal by Mayfair 101 Group from April 2022 contesting a $30 million penalty ordered against four of the group’s companies in 2021. The appeal sought to dismiss the findings of misleading or deceptive advertising and the resultant $30 million penalty. ASIC accused Mayfair 101 of inaccurate advertising of their products (misleading and deceptive conduct), suggesting their products were like term deposits when that was not the case.

CBA and Colonial charges dismissed in case regarding conflicted remuneration

The Federal Court has dismissed charges against Commonwealth Bank (CBA) and Colonial First State Investments (Colonial) regarding alleged conflicted remuneration from 2013 to 2019. The proceedings brought by ASIC have been dismissed by the court. The court found that Colonial did not breach the law when it agreed to pay CBA to distribute Essential Super.

The case was brought up in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

FPA members want sunset period on experience pathway

The Financial Planning Association of Australia (FPA) has surveyed its members on the proposed education pathway for experienced advisors, with most having already completed the existing education requirements.

Over half (55 per cent) are opposed to the proposed introduction of the pathway, with 73 per cent saying they would only support it if it came with a sunset, with the requirement to complete an ethics unit. The FPA has therefore recommended that there be a 10-year sunset period included in the experience pathway, with 10 years of relevant experience between 2004 and 2019, a clean record, membership of a professional association or completion of an approved ethics course, and a statutory declaration.

The FPA says the proposed plan as it stands will fail to attract lapsed advisers back to the industry and make the industry less attractive to new entrants.

APRA amends frameworks for insurance to comply with accounting standard

The Australian Prudential Regulation Authority (APRA) has made final its changes to the capital and reporting frameworks for insurance so they work with the new accounting standard Australian Accounting Standards Board 17 Insurance Contracts (AASB 17). There became a misalignment between the frameworks and AASB 17, which has been corrected.

The requirements are to support those using financial statements to better understand an insurance company’s exposure, profitability, and financial position, while allowing comparisons across similarly placed insurance companies.

Stockbrokers take issue with the QAR proposal

The Stockbrokers and Investment Advisers Association (SIAA) has made a comment on the Quality of Advice Review (QAR) proposal paper, saying there may be possible unintended consequences of the proposal to remove ‘general advice’. There was a proposal that the “definition of ‘personal advice’ should be broader” so as to make clear that the advice is taking the client’s personal circumstances into consideration.

JAWG wants mods to experience pathway

The Joint Associations Working Group (JAWG) - a group of key industry associations such as the AFA, FPA, FSC, TAA and CA ANZ - supports proposed changes to the education framework for financial advisers, with some stipulations.

The JAWG has suggested that advisers can use the experience pathway only if they have passed the exam, demonstrate relevant experience in the 10 years between January 2004 and January 2022 and have and maintain a clean record. The JAWG also recommends a sunset clause which ends 1 January 2032, with all new advisers after that date having to complete regular education standards.