The Melbourne-based firm, NSG Services Pty Ltd, which is currently named Golden Financial Group, was hit with the penalty for breaches of the best interests duty.
Best interests duty was introduced under the Future of Financial Advice (FOFA) reforms of 2013, and is applicable to those operating under an AFSL.
The penalty relates to financial advice provided to retail clients by NSG advisers on eight occasions between July 2013 and August 2015, ASIC said in a statement.
According to ASIC, the clients were often sold insurance and advised to roll over superannuation accounts that committed them to “costly, unsuitable and unnecessary” financial arrangements.
The Court found deficiencies in a number of NSG's processes, including that its training on legal and regulatory obligations was insufficient to ensure clients received advice which was in their best interests.
Further the Court found NSG’s compliance policies were inadequate, and did not address its representatives’ legal or regulatory duties.
There was also an absence of regular internal audits, and the external audits conducted identified issues which were not adequately addressed.
Newly licensed accountants have been cautioned on several occasions about their obligations under the AFSL regime, particularly on issues of documenting their advice. This case serves as a warning to those who resist compliance, both intentionally and by accident.
“This outcome makes clear to the industry the serious consequences of financial services licensees failing to comply with their FOFA obligations. ASIC will continue to pursue licensees who fail to do so,” said ASIC deputy chair Peter Kell.