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ASIC has conducted hundreds of audits and surveys in an effort to catch out accountants and advisers failing on best interests duty, with the results of the shadow shopping investigation set to be released in early 2018.
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ASIC reveals details of accountant, adviser swoop
27 November 2017
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9 minute read
As announced earlier this year, ASIC has been conducting a major shadow shopping exercise to test the legal compliance of advisers and accountants, with the report now slated to be released in the first quarter of 2018.
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ASIC senior manager, financial advisers, Ella Cebon said the corporate regulator adopted a two-pronged approach to the project, conducting surveillance on 250 randomly selected SMSF establishment advice files, and conducting in-depth interviews and surveys with members.
According to Ms Cebon, the project was to “improve ASIC's understanding of the motivations and experiences of SMSF members and also to test legal compliance with best interests duty-related obligations by advisers and accountants.”
Ms Cebon said ASIC had engaged an independent expert to review 250 “randomly selected” customer files with personal advice to set up an SMSF as provided by an advice provider that could either be an accountant or a financial adviser.
The 250 establishment advice files data were provided by the ATO.
“[We] weren't targeting particular people or particular licensees; it was just a random selection,” said Ms Cebon.
“The purpose of the advice review was to test whether advice providers had complied with the best interests duty and related obligations when providing advice to customers to set up an SMSF.
“Where advice providers failed to demonstrate compliance with the law, these failures ranged from process failure, for example, they didn't assess whether the client was capable of taking on the obligations of the trustee, to failures that were likely to result in real financial detriment to consumers.”
In the member research component of the shadow shopping project, ASIC engaged a market research agency to explore why members had set up an SMSF and their experiences in running an SMSF, with physical interviews conducted in Sydney and Melbourne, and a further 400 members surveyed online.
Ms Cebon added that the report would include findings from the project, with a chapter dedicated to areas for improvement and practical tips for SMSF members and advice providers, alongside a forward agenda for ASIC in the SMSF space.
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