The Australian Securities and Investment Commission (ASIC) has agreed to accept an enforceable undertaking (EU) from HSBC Bank Australia Ltd (HSBC) relating to “potentially deficient advice” given on retail structured products.
The EU states that it requires HSBC to review and remediate approximately 464 of the 557 clients reviewed, who have been found to have received potentially deficient advice on retail structured products, between January 2009 and March 2013.
ASIC surveillance of HSBC’s advice on retail structured products found instances where advisers had obtained little or no information about clients’ relevant personal circumstances and raised concerns that advice may not have been appropriate for the clients’ circumstances or needs.
HSBC subsequently reviewed all of its advice on structured products and lodged a breach notification with ASIC, reporting potential deficiencies in the advice provided to approximately 464 of the 557 clients reviewed.
Remediation plan for the affected clients
Under the EU, HSBC will implement a remediation plan for the affected clients; develop and implement an assessment plan to determine whether the problems identified may relate to other types of products; and appoint an independent expert to report on the adequacy of HSBC’s changes.
“One of the fundamental obligations of financial advisers is to ensure that financial products are appropriate for the consumers’ needs and circumstances,” said ASIC deputy chairman Peter Kell “Where that doesn’t occur, ASIC will intervene to ensure that affected clients are reviewed and compensated fairly and consistently.
‘Instances of poor advice’
“Clients affected by the breach will have an opportunity to have their advice reviewed, and where instances of poor advice that led to financial loss are identified, to receive compensation. The independent expert will assess the adequacy of the remediation program, HSBC’s compliance with the EU, and will report its findings to ASIC.”
A copy of the EU has been made available on the ASIC website to view.