ASIC has accepted an enforceable undertaking (EU) from a regional Australian financial services company which switched clients into a fund run by collapsed Trio Capital and issued defective statements of advice or, in some cases, no statements.
Under the EU, an independent expert will monitor Kilara Financial Solutions Pty Ltd for at least a year at Kilara's expense in a rigorous four-step review of the Corowa-based company's compliance measures.
From October 2006 to June 2008, Kilara recommended retail clients switch to My Retirement Plan which, in turn, invested in My Income Pool or My Growth Pool, ASIC said.
Collapsed investment group Trio Capital was the responsible entity for My Retirement Plan.
ASIC said it was concerned that Kilara did not consider clients' existing superannuation funds when advising them. It said it was also concerned it did not consider relevant personal circumstances, goals or risk tolerance or, at the very least, did not document the considerations.
ASIC added that Kilara's statements of advice were defective and, in two cases, provided advice on "a time-critical basis" but failed to provide statements.
As part of its undertaking, Kilara give an external compliance consultant access to its books as well as past and present employees, and come up with a detailed compliance plan within 30 days.
Kilara has two weeks to send ASIC-approved letters to the clients it put into My Income Pool or My Growth Pool. In the letter, it must invite clients who believe they were adversely affected to request a review of the advice they received.
Clients can specifically get Kilara to review whether the advice they received stood up to two sections of the Corporations Act: the requirement to have a reasonable basis for advice; and an additional requirement that must be met when advisers recommend switching products.
