Sentry Financial Services will address concerns raised by the Australian Securities and Investments Commission (ASIC) about advice provided to SMSF clients through its corporate authorised representative, Connect Financial Services.
The action to be undertaken by Sentry comes after ASIC surveillance identified three specific compliance activities it was worried about.
The regulator’s concerns included the requirement for a statement of advice to be given to the client, the requirement to act in the best interests of the client and provide appropriate advice, and the product replacement disclosure requirements when recommending the replacement of one financial product with another.
ASIC was also concerned Sentry might not have complied with its obligations to properly monitor and supervise Connect and ensure it was adequately trained and competent to give SMSF advice.
In response to these issues, Sentry has agreed to write to 158 clients that received an SMSF promotional letter from Connect and inform them the letter contained personal financial advice.
It will offer those clients a review so any necessary remedial action can be undertaken.
Sentry will also engage with an independent expert to review 17 client files of Connect that involved the establishment of an SMSF.
That expert will make recommendations to ASIC regarding any deficiencies identified and, where relevant, recommend remediation and/or compensation for the client.
ASIC senior executive leader Louise Macaulay said establishing an SMSF was one of the most significant steps an investor could take with their retirement savings as it involved taking greater personal responsibility for investments.
“Those advising on SMSFs should be offering personal financial advice which considers the consumer’s individual circumstances and makes sure the advice adequately meets their needs,” Macaulay said.
“[Australian financial services] licensees are responsible for the conduct of their representatives in this regard and must be held accountable for any compliance failures.”