ASIC zeroes in on recurring compliance breaches

ASIC has warned financial advice licensees to address lapses in reference checking, professional indemnity insurance and superannuation advice practices in an update released this week.

The regulator has recently released new guidance for professional year candidates and supervisors while warning financial advice licensees over reference checking, professional indemnity insurance and poor-quality superannuation advice.

The regulator's latest financial advice update highlights several areas of focus for Australian financial services licensees and advisers, including new guidance for candidates undertaking their professional year.

ASIC Information Sheet 297 sets out common questions on professional year acquirements including record keeping, plans, tasks and logbooks. Candidates are also reminded to select a licensee and supervisor capable of providing appropriate supervision and resources throughout the supervised work and training period.

ASIC has also reminded licensees of their obligations to conduct reference checks before employing or authorising prospective financial advisers. The regulator said recent breach reporting data indicated some AFS licensees were appointing advisers without completing required checks.

The ASIC reference checking and information sharing protocol has applied to all references since March 2025, with non-compliance potentially attracting civil penalties or administrative action.

The regulator has also identified professional indemnity insurance as an area requiring attention after analysing annual FS70 fillings from AFS licensees.

ASIC identified 10 licensees that reported holding less than $2 million in PI cover. In nine cases, the licensees had incorrectly understated the insurance they held and subsequently corrected their fillings. In the remaining case, the licensee held inadequate cover and began winding up after ASIC intervention.

ASIC said licensees should ensure PI insurance is adequate for their business and that annual financial statements are lodged accurately and on time.

The update also flags ongoing concerns around personal advice involving superannuation contributions and rollovers.

ASIC said poor advice in this area had resulted in clients exceeding contribution or transfer balance caps and incurring additional tax. Advisers are expected to verify existing super arrangements, prior contributions and transfers, available cap space and relevant tax consequences before recommending strategies.

The regulator said AFS licensees should ensure advisers are trained and supervised appropriately, with ASIC continuing to review poor advice through surveillance, reportable situations and other intelligence.