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Screenshot of a breaking news alert e-mail from Q2 2017
An ASIC investigation of a number of advice licensees within the National Australia Bank Group (NAB Group), for failing to disclose relationships between advisers, advice licensees, and other members of the NAB Group that issue investment products, has resulted in corrective disclosure being made to customers.
The non-disclosure occurred when customers were advised to acquire products issued by NAB Group-related firms, including MLC-branded products. Customers were provided with Statements of Advice (SoAs) and Financial Services Guides (FSGs) by their financial advisers that did not fully disclose the connection between each customer’s adviser, the advice licensee, and recommended investments.
Disclosing associations or relationships between advisers, employers, authorising licensees and issuers of financial products to customers in FSGs and SoAs is required under the Corporations Act.
At least 150,000 customers received deficient disclosure either in SoAs or FSGs in relation to MLC-branded products and boutique investment manager products.
The defective disclosure occurred following a failure to update template documents due to a process error.
The licensees investigated by ASIC were:
- National Australia Bank Limited;
- Godfrey Pembroke Limited;
- Apogee Financial Planning Limited;
- GWM Adviser Services Limited;
- Meritum Financial Group Pty Ltd; and
- JBWere Limited.
Following discussions between ASIC and the NAB Group, customers who invested in MLC-branded products will receive corrective disclosure when they log in to their accounts on the MLC website for a three month period. NAB has also agreed to write to the remainder of affected customers currently invested in related products, explicitly acknowledging the issue and providing corrective disclosure.
ASIC’s Deputy Chairman Peter Kell said:
This investigation is a result of ASIC’s priority of improving compliance and disclosure standards in vertically integrated financial services licensees.
ASIC acknowledges the cooperation of NAB in this matter.
This outcome is a result of ASIC’s Wealth Management Project.
The Wealth Management Project was established in October 2014 with the objective of lifting standards by major financial advice providers. The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, Macquarie and AMP).
ASIC’s work in the Wealth Management Project covers a number of areas including:
- working with the largest financial advice firms to address the identification and remediation of non-compliant advice; and
- seeking regulatory outcomes, where appropriate, against licensees and advisers.