The Australian Securities and Investments Commission (ASIC) has released further details on the licence cancellation of financial planning business AAA Financial Intelligence and AAA Shares.
The cancellation of the AAA’s Australian financial services (AFS) licence was announced last Thursday, but the corporate regulator has waited to provide details of its investigation, which found that the business repeatedly failed to comply with the Corporations Act 2001 and the conditions of its AFS licence.
“Licensees have a general obligation to do all things necessary to ensure they provide financial services efficiently, honestly and fairly,” ASIC commissioner Peter Kell said in a statement.
“AAA Financial Intelligence was found to have an appalling record that put at risk the quality of advice it provided to retail clients.”
ASIC said it was particularly concerned about the level of supervision of the representatives AAA appointed and their conduct and advice provided to retail clients.
An investigation of the business starting in June 2010 found that AAA breached the majority of its licence obligation including adopting a business model that only allowed it to increase cash flow by increasing the number of advisers it authorised.
ASIC also found that AAA failed to ensure that representatives had the necessary knowledge and skills prior to appointing them as authorised representatives, and further failed to ensure that they were adequately trained or supervised.
The company also failed to ensure that its representatives complied with relevant financial services laws when providing financial advice to retail clients, or identify and manage conflicts of interest.
“The cancellation of AAA’s licence demonstrates ASIC’s commitment to ensuring advice industry participants are meeting their key obligations, including having adequate compliance measures in place,” Mr Kell said.
ASIC has put in place a communication strategy for the representatives of AAA, including asking all representatives of AAA to communicate the consequences of the licence cancellation to their clients.
