The adviser monitoring and supervision practices at RI Advice, recently sold to IOOF by ANZ, has been revealed to be inadequate at royal commission hearings.
Appearing before the royal commission on Friday, general manager of aligned dealer groups and advice standards at ANZ and the former CEO of RI Advice Darren Whereat, admitted to “unacceptable” practices regarding the monitoring and punishment of adviser misconduct.
Under questioning by Rowena Orr QC, Mr Whereat admitted that former authorised representative John Doyle CFP was allowed to continue providing advice to as many as 700 clients even after he was suspended by the licensee.
“You allowed him to continue providing advice to existing clients after this suspension?” Ms Orr asked.
“We did. We suspended John and enabled him to give advice to his 45 existing clients or at our direction to remediate the files that we needed and the clients that we needed him to work with,” Mr Whereat replied.
“Even though you had seen that the pre-vetting requirement had been ignored by Mr Doyle previously?” Ms Orr pressed further.
“Mr Doyle’s had gone outside the pre-vet control. We have since recognised that is unacceptable from a control aspect.”
The allowance came despite a stated ANZ policy which specified that “the individual representative must not perform any act as RI Advice Group’s authorised representative during the period of suspension”.
Mr Whereat concurred with Ms Orr that the decision to allow Mr Doyle to continue giving advice after suspension was a “mistake” and “unacceptable”.
ANZ’s conduct also came under fire when Mr Whereat admitted that Mr Doyle’s case – which had been subject to two poor audits and a number of client complaints – was not deemed a “high priority” relative to other cases of adviser misconduct within the group.
Counsel assisting put to Mr Whererat that Mr Doyle was a high-adviser in terms of generating funds under advice and that he was therefore granted leniency.
Mr Whereat replied that Mr Doyle was “outside” the normal pre-vetting, onboarding and monitoring process.
Commenting on Twitter, compliance consultant Sean Graham of Assured Support – who has previously worked with ANZ’s Millennium3 among other licensees – said Mr Whereat has missed the point of ongoing adviser monitoring.
“Doyle may have been operating outside the pre-vetting process but the measure of an effective compliance, governance and risk framework is its capability to identify non-compliant conduct of that sort,” Mr Graham wrote. “A single control is pointless.”
The revelation of poor systems and processes at ANZ Wealth may cause headaches for IOOF, which purchased the business for $975 million in October 2017.
Commenting on the royal commission hearings so far, Bell Potter analyst Lafitani Sotiriou said IOOF faces risks by way of ANZ’s involvement in the hearings and its recent EU with ASIC.
“[IOOF] is now lumped with the mature, less agile and fully-integrated players that the advisers are moving away from,” Mr Sotiriou said. “We see significant risk in the acquisition and maintain our Sell Recommendation.”
The prudential regulator has released the 2019 version of its Financial Sector (Shareholdings) Rules for new companies entering the sector. ...
The corporate regulator has put a stop order on the issuing of a product disclosure statement from Investors Exchange Limited following conc...
Complacency, a lack of accountability and short-term fixes have all been listed as issues with ANZ’s culture in a statement by chairman Da...