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ASIC imposes controls on Guardian Advice

Chris Hamblin, Editor, Editor, London, 21 January 2015

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The Australian Securities and Investments Commission has varied the licence of Guardian Advice, while commanding it to review the way it monitors its advisors.

The regulator's stern measures flow from an investigation that followed the migration of advisors from AAA, whose licence it cancelled in 2013, to Guardian Advice. Today's total of advisors is 257. ASIC wanted to see whether Guardian's monitoring and supervisory processes were ensuring that these representatives were giving clients suitable advice.

Last year, on the subject of compliance with the laws relating to appropriate advice and the obligaton of firms to serve the needs of clients, ASIC undertook a review of more than 200 advice files from large, medium and small Australian financial services (AFS) licensees and found that 63% were compliant. Its action against Guardian is part of the subsequent clampdown.

ASIC's surveillance of Guardian Advice’s business, according to its website, found instances where there was "not a demonstrated reasonable basis for the advice provided and also files that did not evidence the advice given was in the best interests of clients."

It also accuses Guardian of keeping poor records, not responding to its representatives' 'breeches', not having a good human resources department and having bad IT.

Part of the new regime involves regular reporting on progress for the next two years and the appointment by Guardian of an independent consultant to work out a plan to help it raise its game. It remains to be seen whether the 'consultant' will be one of the Big Four accountancy firms.

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