Financial adviser's registration suspended over advice failures

The Financial Services and Credit Panel (FSCP) has suspended the registration of financial adviser Ian Reid for three months, effective Nov. 21, ASIC reported.

During this period, Reid is prohibited from providing personal advice to retail clients on financial products.

The suspension follows an FSCP determination that Reid failed to comply with obligations when advising three clients. Reid used outdated records of advice (ROAs) based on statements of advice (SOAs) issued up to seven years earlier, which FSCP found were no longer relevant to the clients’ circumstances.

Key failures identified in client advice

FSCP concluded that Reid did not meet several obligations under sections 961B and 961G of the Corporations Act. Specifically, the panel found insufficient evidence in client files to show:

• Adequate inquiries into clients’ relevant circumstances
• Consideration of results from those inquiries in scoping advice
• Proper evaluation of the clients’ strategic advice needs
• Justification for why previous SOA recommendations were still suitable
• That judgments were based on each client’s specific circumstances

Two clients’ circumstances had changed significantly, invalidating the further advice exemption under regulation 7.7.10AE of the Corporations Regulations 2001, ASIC reported.

FSCP’s role and broader implications

FSCP is an independent decision-making body operating alongside ASIC to address lower-level misconduct in financial advising. It can issue registration suspensions under section 921L(1)(b) of the Corporations Act.

The decision on Reid has been published in the FSCP Outcomes Register.

ASIC, which is targeting a regulation overhaul, referred Reid’s conduct to the FSCP following an investigation into persistently underperforming superannuation investment options, detailed in ASIC Report 779. The report examined why some superannuation members remained in poorly performing options and highlighted gaps in advisers’ compliance.

Guidance on records of advice

In 2021, ASIC issued guidance on records of advice (ROAs) to clarify adviser obligations and provide examples of best practices. This guidance emphasises the importance of keeping client advice relevant, especially when using ROAs for personal financial advice.

For further information, financial advisers are encouraged to review ASIC’s resources, including Regulatory Guide 263 and Information Sheet 276, to ensure compliance and maintain professional standards.

Read about the ASIC report on the regulator’s website.

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