The Financial Services and Credit Panel (FSCP) has issued a reprimand to a relevant provider over superannuation rollover, marking its third action this year.
Issued to an adviser anonymised as Mr A on 18 March, the FSCP said the relevant provider gave advice in August 2023 recommending two clients rollover their superannuation balances to a new plan.
However, he failed to identify that their insurance was being funded by their other superannuation funds, which resulted in this coverage being lost.
“When giving the advice, the relevant provider failed to identify that death and TPD insurance was funded from the clients’ previous superannuation funds. The rollover resulted in the clients’ loss of death and TPD insurance coverage,” the FSCP said.
“The relevant provider identified the error in August 2024 (after providing 2 subsequent records of advice).”
Once the issue had been identified, the relevant provider notified his licensee and arranged for an insurance review with the clients.
Nevertheless, the FSCP ruled he had contravened the Corporations Act as well as failed to comply with two standards within the Code of Ethics.
“By reason of the conduct, the Sitting Panel reasonably believed that the relevant provider had contravened the financial laws s961B(1), 961G, s947D and 921E(3). The 921E(3) contravention resulted from the failure to comply with Standard 5 (client care) and Standard 9 (quality process) of the Financial Planners and Advisers Code of Ethics 2019,” it said.
Standard 5 requires financial advisers to ensure all advice and product recommendations are in the client’s best interests and are appropriate to their specific circumstances, confirming the client understands the advice, its benefits, costs, and risks.
Standard 9 of the Code states that all advice given and all products recommended to a client must be offered in good faith and with competence and be neither misleading nor deceptive.
This is the third action taken by the panel since the start of 2026 with a written direction issued in February over advice regarding self-managed superannuation funds and a reprimand issued about insurance coverage earlier in March.
The first related to a relevant provider who advised a client to establish an SMSF, rollover existing funds into the SMSF and make investments in certain unregistered managed investment schemes for wholesale investors.
He was required to a financial services compliance expert who then will complete an audit of the next 10 pieces of advice he prepares for a retail client and follow the relevant audit procedures to comply with the written reprimand.
The second matter concerned two matters; a failure to make “reasonable inquiries to obtain complete and accurate information about whether the client held insurance through their existing superannuation before recommending that the client transfer their superannuation from one fund to another fund” and a failure to base judgements on the clients’ relevant circumstances.
