ASIC imposes conditions on AFSL over compliance concerns

A Sydney-based Australian financial services licence (AFSL) holder has had addition licence conditions imposed by the Australian Securities and Investments Commission (ASIC) over concerns representatives were providing unlicensed advice.

Kalkine Pty Limited offers customers equity research reports made available via an online subscription service, and the company’s AFS licence – which it has held for almost 13 years – allows it to provide general advice only.

The corporate regulator raised several concerns over Kalkine’s operations, including:

• “Kalkine’s representatives, who are based in India, may have provided personal advice as part of the sale of subscription services when Kalkine’s AFS licence only authorised it to provide general financial product advice,
• Kalkine’s representatives may have misrepresented to customers the kind of advice being given, by qualifying this as general advice but leaving customers with the impression that the advice was directed to their own personal circumstances,
• Kalkine failed to do all things necessary to ensure that the financial services covered by its AFS licence were provided efficiently, honestly and fairly including but not limited to ensuring the advice being given by its representatives was appropriate and within the scope of its licence, and
• Kalkine’s processes to ensure that its representatives were complying with the law when interacting with consumers were inadequate.”

In a statement released yesterday, ASIC said the new conditions imposed on Kalkine’s AFSL included the requirement to “engage a consultant to review, assess and report to ASIC whether Kalkine’s interactions with its customers are compliant and its supervision mechanisms are adequate”. If the independent compliance consultant were to find any failings, Kalkine must undertake any recommendations to address the “deficiencies”.

“AFS licensees are responsible for the conduct of their representatives and must have adequate supervision arrangements in place to ensure their representatives comply with the law when engaging with customers,” ASIC Deputy Chair, Sarah Court, said.

“As a result of our investigation we remain concerned that Kalkine fell short in meeting its obligations, leading ASIC to take the significant step of imposing new licence conditions. Kalkine will now undergo an external review to ensure it acts lawfully and within the scope of its licence.”

ASIC confirmed Kalkine had accepted the new conditions on its AFSL.