ASIC imposes conditions on iPlan licence


ASIC has imposed additional conditions on the Australian financial services (AFS) licence of Queensland-based, iPlan Financial Services Pty Ltd (iPlan), after a surveillance of its advice business.

ASIC’s action follows concerns iPlan entered into an agreement regarding an investment platform which created a conflict of interest. Specifically, ASIC found:

iPlan may have advised clients to transfer from existing financial products to the platform without disclosing a reasonable basis for the advice;the disclosures in relation to iPlan’s conflict of interest, relevant to the advice provided, were insufficient; anda number of clients sustained financial detriment as a result of the advice.

ASIC has varied iPlan’s AFS licence to include conditions that require the business to undertake further communication with its clients about how it manages conflicts of interest. iPlan must also appoint an independent compliance expert to review its advice process and calculate payments to be made to clients entitled to financial redress. These conditions were effective as of 12 May 2011.

ASIC Senior Executive Leader, Financial Literacy, Consumers, Advisers and Retail Investors, Delia Rickard, said, ‘Licensees often have a conflict of interest when recommending products to clients. We say it is up to them to manage these conflicts and, if a conflict exists, they need to make sure they demonstrate a reasonable basis for any product recommendations.’

ASIC acknowledges the efficient, cooperative and consultative approach taken by iPlan which voluntarily offered to engage an independent expert to review its processes for compliance with obligations under the Corporations Act 2001 (Corporations Act). This expert will report to iPlan and ASIC and provide recommendations which iPlan will be required to implement. The compliance expert will also review the advice provided to clients who invested in the platform and determine whether the advice complied with iPlan’s obligations under the Corporations Act. Financial redress, calculated by the compliance expert, will be offered by iPlan to affected clients.

ASIC will continue to monitor iPlan’s compliance, via reports from the independent compliance consultant, for 26 months.

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