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ASIC calls on NAB to improve disclosure

ASIC calls on NAB to improve disclosure

 An investigation by ASIC has forced NAB Group advice licensees to make corrective disclosures to customers.

The corporate regulator found that NAB's dealer groups failed to disclose relationships between advisers, licensees, and other members of the broader group that issue investment products to at least 150,000 customers - a requirement under the Corporations Act.

ASIC said the non-disclosure occurred when customers were advised to purchase products issued by NAB Group-related firms, including MLC-branded and boutique investment manager products. The Statements of Advice and Financial Services Guides provided failed to fully disclose the connection between each customer's adviser, the advice licensee and the investments suggested.

ASIC investigated NAB, Godfrey Pembroke, Apogee Financial Planning, GWM Adviser Services, Meritum Financial Group, and JBWere, with the non-disclosure resulting from a failure to update template documents due to a process error.

As a result of the findings, and following discussions between NAB and ASIC, NAB will issue corrective disclosures to customers invested in MLC-branded products when they log in to their accounts on the MLC website for a three-month period.

The institution will also write to the remaining affected customers currently invested in related products to acknowledge the issue and provide corrective disclosure.

Commenting, ASIC deputy chairman Peter Kell said: "This investigation is a result of ASIC's priority of improving compliance and disclosure standards in vertically integrated financial services licensees."

Responding to the news, NAB executive general manager of wealth advice Greg Miller said: "For some years now, NAB has been on a journey of simplification, seeking to make things easier for our customers and to provide more investment options for them. Unfortunately we did not execute some of these changes well. While simplifying some of the documentation that we send customers, and while expanding our range of investments, we omitted disclosures that are important for our customers to receive."

"We apologise to our customers, and want to assure them that they did not impact the quality of advice they received from their adviser, and there is no impact on their investments or portfolios.

"Since identifying and notifying ASIC of these errors, we have worked to correct them, and to improve our processes to try to ensure they do not happen again."

The investigation is one of many being undertaken by ASIC as part of its Wealth Management Project, analysing the conduct of Australia's largest financial advice firms.

Separately, ASIC has also aired its concerns around accountants inappropriately providing 'sophisticated investor' certificates to retail investors.

Companies raising money by offering shares to retail investors are required to give the investors sufficient information via the provision of a prospectus or other regulated disclosure documents, helping them to make a decision as to whether they should invest in the company. It also serves as a key protection for 'retail investors' under the Corporations Act.

ASIC said it is aware of instances in which accountants have facilitated retail investors acquiring shares offered by a company without adequate or any disclosure, citing recent fundraisings where some accountants used trust or company structures that claim to allow clients who are not 'sophisticated investors' to purchase shares without the required prospectus or other disclosure document.

Highlighting a recent offer of shares by Kwickie International, ASIC states that Kwickie International shares could not be offered to retail investors through a trust structure and it is continuing to investigate the use of such structures.

ASIC said it is important that the 'sophisticated investor' test is applied consistently and in line with the law, otherwise 'retail investors' will not be protected by the existing safeguards around making appropriate investment decisions.

This article was first published by
Last modified onFriday, 07 July 2017 21:32

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