ASIC takes first action for best interest breach

ASIC has taken its first civil penalty action against Melbourne-based licensee NSG Services Pty Ltd for allegedly breaching its ‘best interests duty’, introduced under the Future of Financial Advice (FOFA) reforms.

ASIC’s allegations, as listed in its media release last week, include that NSG failed to take reasonable steps (such as appropriate training) to ensure that its advisers complied with the best interest obligation when providing advice to clients since it became mandatory on 1 July 2013.

As a result, ‘on numerous occasions’, NSG advisers did not act in the best interests of their clients, including eight occasions where clients (under advice from NSG advisers) were sold insurance or advised to rollover superannuation accounts that committed them to ‘costly, unsuitable and unnecessary financial arrangements’.

The first hearing of the matter is listed before the Federal Court of Australia on 8 July 2016.