ASIC acts on unlicensed personal advice

ASIC has forced Australian financial services (AFS) licensee Kalkine Pty Limited to appoint an independent compliance consultant to address concerns regarding customer service representatives providing unlicensed advice. Kalkine is a Sydney-based financial services group that provides equity research reports using a subscription service available on their website. Kalkine has held an AFS licence (licence number 425376) since 11 September 2012, authorising them to provide general advice only.

ASIC has imposed new license conditions on Kalkine’s AFS licence in an attempt to ensure compliance with obligations as an AFS licensee. These conditions include an obligation for Kalkine to engage a consultant to review, assess and report to ASIC if their interactions with customers are compliant and that their supervision mechanisms are appropriate.

If any shortfalls are identified, the independent compliance consultant must make any recommendations to address the shortcomings that must be addressed by Kalkine.

ASIC has raised concerns that:

• With Kalkine’s representatives being based in India, they may have provided personal advice as part of the sale of subscription services, where Kalkine’s AFS licence is only authorised to provide general financial product advice,
• Kalkine’s representatives may have misrepresented advice to customers, qualifying the advice as general advice but leaving the customer with an impression that the advice was directed at their personal circumstances,
• Kalkine failed to adequately ensure that the financial services as authorised by their AFS licence were provided efficiently, honestly and fairly including but not limited to ensuring that the advice provided by their representatives was appropriate and in the scope of their licence, and
• Kalkine’s processes to ensure their representatives were complying by the law when interacting with customers were appropriate.

Kalkine has agreed on the new licence conditions that are being imposed.

All licensees who are only authorised to provide general advice should consider their systems for ensuring compliance and preventing the risk of misrepresentation by their representatives. If you require assistance complying with your AFS licence obligations or assessing your internal compliance processes, then please contact Chris Mee on cmee@cnmlegal.com.au or call 07 3211 4010.