ASIC accuses Kalkine of providing unlicensed advice

ASIC has told Kalkine it must appoint an independent compliance consultant to address concerns its customer service representatives have been giving unlicensed advice.

Kalkine is an equity research house which produces stock analysis and buy, hold and sell reports via a subscription service for retail investors. It operates in Australia, Canada, the UK and US.

ASIC has imposed new licence conditions on Kalkine's Australian financial services licence (AFSL) to ensure compliance with its obligations as an AFS licensee.

"These conditions require Kalkine 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," ASIC said.

"Where shortfalls are identified, the independent compliance consultant will make recommendations to address the deficiencies which must be implemented by Kalkine."

ASIC said it held concerns that Kalkine's representatives, who are based in India, may have provided personal advice as part of the sale of subscription services when Kalkine's AFSL only authorised it to provide general financial product advice.

Additionally, the regulator said Kalkine's representatives may have misrepresented to customers the kind of advice being given, by qualifying it as general advice but leaving customers with the impression that the advice was directed to their own personal circumstances.

ASIC said Kalkine failed to do all things necessary to ensure that the financial services covered by its AFSL were provided "efficiently, honestly and fairly".

The regulator added that Kalkine's processes to ensure that its representatives were complying with the law when interacting with consumers were inadequate.

ASIC deputy chair Sarah Court said AFS licensees are responsible for the conduct of their representatives and must have adequate supervision arrangements in place.

"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," Court said.

"Kalkine will now undergo an external review to ensure it acts lawfully and within the scope of its licence."

Kalkine has agreed to the new licence conditions being imposed.