How product providers are sapping advisers on AML/CTF
Financial advisers with long-term clients are being asked by product providers to re-verify their clients details every six months under the AML/CTF regime.
What is more, the time and cost involved in undertaking the re-verification is significant, according to the Financial Advice Association of Australia (FAAA).
In a submission responding to key changes to the AML/CTF Act, the FAAA has pointed to the level of financial adviser disquiet at “the additional requirements placed on them, by product providers”.
The FAAA said the re-verification process was causing significant concern for both advisers and their clients.
“Most financial planners/advisers have long-term clients. However, some product providers request customer identification to be re-verified every six months even if the customer identification or circumstances have not changed, the source of wealth/ source of funds have previously been checked, and no trigger event has occurred,” the submission said.
“Product providers are demanding client photo identification to be held by both the item 54 entity and the product provider. Product providers appear to have introduced requirements that well exceed the obligations in the Act, which over-complicates the AML/CTF regime for reporting entities and clients.”
“The unnecessary requests for re-verification significantly increases the cyber-security risk for businesses and clients. Clients have expressed their concern to financial planners/advisers about these requests for re-verification and multiple entities holding their personal data. The changes proposed in the consultation paper will not address this issue.”
“Feedback from FAAA members highlights that consumers are extremely concerned about their exposure to cyber security risks and privacy issues because their personal data and identification documentation is held on file by multiple financial services entities for AML/CTF purposes (eg. their financial planner/adviser and each product provider),” the submission said.
“Financial planners/advisers do not feel comfortable holding verified copies of their client’s personal identification documentation for the same reasons. It is unclear if there are protections under privacy laws that permit clients to request for certain information to be no longer retained on file.”
“Based on the consultation paper, it is unclear how the proposals to modernise the AML/CTF regime would interplay with the changes to the Privacy laws released by the AGD in January 2023, and measures to address cyber security issues.”
“While customer identification is vital, the holding of customer information and identification increases the cyber security risk and poses privacy issues for customers and businesses. As evidenced through recent high-profile cases, cyber attacks and data breaches are increasing in their occurrence and severity.”
It’s simple for us. If we have administrative requirements that exceed the law we discuss it with the BDM. We let them know that if we are complying with the law that’s all we’ll do. If that’s not good enough we tell them then the moneys going elsewhere.
Normally this fixes the problem.
Or as my experience with some industry funds – if you don’t provide it, we cut the fees payable to you and take you off as a registered adviser with us
Bit to be said about this – especially in the world that we may be moving to.
Typical freaking mass BS over regulation and Adviser red tape, costly, useless road blocks to increasing the cost of Advice and reducing consumer access.
And you can bet it’s being hammered into product providers by ASIC and other mind numbingly useless, Red Tape mad bureaucratic bumbling fools from Canberra.
When will the madness ever reduce ???
Our experience here is the worse offenders in this scenario are the union funds. The do everything within their power to make it as difficult as possible for advisers and clients to deal with them. Their attitude is once they have the clients money it is now the union funds to do with as they wish. We have even seen cases where a third party authority is sent and they purposely delay processing it, and then call the client directly and try to talk them into meeting with one of their “advisers” instead. Union funds know they can do anything and get away with it.
No doubt fully supported by their best Corrupt buddies ASIC.
Which fund is this?
The ridiculous thing is what Terrorist or money launderers would even be bothered going through the whole 2023 extensive financial planning process. ART (Sunsuper) recently took a month to establish a pension. After 3 appointments and a relationship of 8 years, I completed the FSC-required AML/CTF forms. However, ART insisted on following their own process, despite legislation being in place where they could rely on third parties such as Advisers. In the mean time the application sat there for weeks for ART to call the client. They wanted “one more piece, a medicare card”. Think of the firms that have that Identification now. Union Super funds are even worse. As an Adviser I’m going to have to hold that person’s ID on file for 10 years (lookback) a paraplanning company may have it, the licensee will have it, an external auditor, my own firm, even a range of regulatory bodies, and now ART and any third parties they rely on too. That’s actually creating a significant risk for the client.
ART are also busy rejecting fee consent forms for us for very minor issues. Of course, as an Adviser, we are criminal masterminds.
I have clients in ART who had originally joined Sunsuper. They tell me service levels have gone down significantly since the merger with QSuper to create ART.
Sunsuper was historically one of the better union funds in terms of adviser relations, but it seems that may have also gone downhill since the merger.
It would help if FAAA had a register of the product providers with unreasonable compliance … we could then avoid them until their practices became less onerous.