Australian Financial Services Licensing (AFSL) Forum

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    Jason Adams

    Situation:

    Client A is given advice from Financial Adviser 1, to open a new superfund account and is given an SOA by that adviser etc all as normal. However, when opening the account, it is incorrectly lodged under different financial advisers login/adviser code (adviser 2). Different adviser under a different AFSL.

    The advice fees which were collected by the new superfund as per the SOA (from adviser 1) are therefore paid for Advisor 2. Eventually, the error is picked up and via change of advisor form the client is “transferred” from Adviser 2 back to adviser 1. Adviser 2 pays the fees that it received for the client over to Adviser 1.

    The fees charged to the client were the same as under the SOA. There were no investment or other differences, the client received everything as per the SOA. The difference is, they were lodged under the wrong code. The wrong adviser was paid, but then on paid it to the right adviser.

    You might wonder how could this even happen in the real world. With MLC for example. Their apps are all online. So you complete the apps under an adviser login, but when filling in the app, you need to put in your adviser code. IF you put in a typo you can accidentally put in a different adviser code. If this happens, the account, although created under 1 advisor login will be opened under the other adviser and removed from the first advisor…..

    My questions: 1. What compliance issues are there? Can you think of any possible – even at a stretch – breaches or corporations act issues? and lets say the admin person is new, and thanks to google chrome pre filling forms, the mistake gets repeated over and over again….

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