ASIC announced yesterday that it has commenced proceedings against Melbourne-based NSG Services Pty Ltd for breaches of the best interests duty introduced under the Future of Financial Advice (FOFA) reforms.
This is the first civil penalty action ASIC has taken against a licensee alleging breaches of the best interests duty, and it is seeking declarations of breaches and financial penalties.
In its announcement, ASIC noted NSG has been licensed to provide personal advice on risk insurance and superannuation products to retail clients since 3 April 2008.
NSG employs advisers to provide financial services advice on its behalf as its representatives and authorised representatives, ASIC said.
ASIC is alleging that NSG failed to take reasonable steps to ensure that its advisers complied with the best interests obligation when providing advice to clients and as a result, on numerous occasions, NSG advisers did not act in the best interests of their clients.
In addition, ASIC is alleging that since 1 July 2013, on eight specific occasions, and because of advice provided by NSG advisers, clients were sold insurance and/or advised to rollover superannuation accounts that committed them to costly, unsuitable, and unnecessary financial arrangements.