Law firm offers tips on compliance issues and PI insurance
Where advisers are rectifying compliance issues for clients involving advice they provided, advisers should contact their PI insurer where they have any doubts to avoid making the situation worse, says an industry lawyer.
Speaking at the Heffron Super Intensive Day, Cooper Grace Ward Lawyers partner Scott Hay-Bartlem said where a client raises a compliance issue and the adviser realises they may have been involved, the best place to start is by looking at the client file.
“It’s best to have a look first because you don’t want to go the insurer with an incorrect position,” Mr Hay-Bartlem said.
“The PI insurer is similar to the ATO, you want to make sure you know what happened, so you should always go and dig up the file, and when you dig out that bit of paper that explains everything, you may realise that the client didn’t mention something or they were told not to do it.”
When in doubt though, advisers are best to speak to the insurer, he stressed.
“I’ve seen too many advisers who’ve tried to fix things and made it worse and then the insurer may not cover you,” he warned.
He also cautioned advisers from backdating documents as a way of trying to fix issues.
“Never backdate documents; you’re better off doing a document today which confirms something that you were thinking about a year ago then signing a document today that was dated a year ago,” he explained.
Mr Hay-Bartlem said this can cause significant issues for advisers and accountants where issues end up in court.
“There was a change of trustee case in Queensland where the client took over the fund and realised the change of trustee wasn’t done properly five years ago. So, they did the change of trustee correctly, gave it to the client,” he said.
“The client in court said, ‘I remember signing that document, it was April 2015, because I don’t know why it stated 2010 and I gave it back to the accountant undated and he said he would look after it’.
“Clients can throw advisers under the bus in front of the court, so paperwork which is done to rectify something is better than trying to make it look like it was done right the first time.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
