A father and son pair of financial advisers will face increased scrutiny to ensure their compliance with financial services law, following a crackdown by the corporate watchdog.
Queensland-based Reid Menkens and his son Leo Menkens, who run a small financial services business in Brisbane called Menkens Financial Group, have entered into enforceable undertakings with the Australian Securities and Investments Commission.
The pair was investigated as part of ASIC’s project targeting compliance in the four major banks, Macquarie and AMP.
Reid Menkens is a former representative of Millennium3 Financial Services and AMP Financial Planning, while Leo Menkens is a former representative of AMP Financial Planning.
ASIC’s concerns about the pair’s conduct came about after a review of AMP files found the father and son had allegedly failed to demonstrate they were acting in the best interests of clients, failed to keep proper records or to provide timely statements of advice.
As part of the enforceable undertakings, Reid and Leo Menkens have agreed to appoint an independent consultant to audit their compliance. The consultant will then report to both ASIC and the Menkens’ current financial services licensee, Austplan.
ASIC deputy chairman Peter Kell said it is incumbent on advisers to comply with financial services law.
“Financial advisers need to ensure their processes and documentation demonstrate that they have acted in the best interests of their clients,” Kell said.
Brad Fox, chief executive of the Association of Financial Advisors told SmartCompany this morning he believes the financial services industry as a whole has improved in recent years.
“Financial advice has been going through a significant period of reform for the last five years, the outcome of which is a significantly increased level of professionalism across the industry,” he says.
“As the higher standards of compliance are introduced, ASIC has an important role to play to ensure that providers of financial advice meet those new standards.”
Fox says SMEs that deal with financial advisers should undertake due diligence in selecting them, which includes checking to see the advisers are registered on the ASIC Financial Advice Register.
“For small businesses and their owners that seek financial advice, which is particularly relevant where a company has debts and personal guarantees in place, they need to ask pertinent questions around the standards that the financial adviser has that ensures they exceed the law,” he says.
Fox says when finding an appropriate adviser, asking for references or seeking a referral from another professional that can be trusted is also “very useful”.
“It is a very small number of financial advisers that have received an ASIC action against them,” he says.
“Business owners and the public should proceed with confidence to seek the financial advice that they need.”
A spokesperson for AMP confirmed to SmartCompany this morning the two advisers’ representative status had been terminated and the company had notified ASIC about it.
“AMP takes advisor professionalism and the delivery of high quality advice to consumers very seriously,” the spokesperson says.
“In instances where advisers don’t meet our standards we will take appropriate action.”
SmartCompany contacted Menkens Financial Group, Millennium3 and Austplan but did not receive a response prior to publication.