The financial planning arm of AMP has stopped providing managed discretionary account (MDA) services as of 10 December 2019.
This followed the Australian Securities and Investment Commission’s (Asic) imposition of tailored licence conditions on the firm in March 2019.
The criteria involved improving the monitoring and supervision of AMP Financial Planning’s discretionary investment services and related financial advice.
The conditions also required a senior manager at the firm to send acceptable attestation to Asic by 30 September 2019 confirming AMP’s compliance with the tailored licence to prove the measures had been implemented and were operating effectively.
But the regulator did not receive an acceptable attestation from the financial planning firm, Asic said.
As the filing had exceptions the watchdog said it could not accept the attestation; so, the company stopped providing MDA services, as required by the licence conditions.
Risky business
Asic said: “MDAs create particular risks for retail clients because when a client enters into a contract with an MDA provider, they give the provider authority to make investment decisions on their behalf on an ongoing basis without seeking the client’s prior approval.
“The risks increase if the person recommending the MDA service and making or influencing the investment decisions are the same because the clients may not be receiving impartial advice about the decision to enter into or remain in the MDA service.
“Asic expects [Australian Financial Services (AFS)] licensees to consider the risks involved with the financial advice and investment activities of their representatives in their monitoring and supervision practices.”
