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01/005 ASIC accepts enforceable undertaking from Burrell Stockbroking Pty Ltd
The Australian Securities and Investments Commission (ASIC) today announced that it has accepted an enforceable undertaking from Brisbane-based Burrell Stockbroking Pty Ltd, as a result of its ongoing surveillance of participants in the securities industry.
“ASIC puts a priority on ensuring that investors are given financial advice tailored to their investment objectives, financial situation and particular needs”, Queensland Regional Commissioner Mr Greg Tanzer said.
“This undertaking by Burrell Stockbroking is evidence that ASIC will act to protect consumers by ensuring that the people who provide them with securities advice have appropriate compliance systems and procedures in place.”
Burrell Stockbroking has undertaken to appoint an independent compliance consultant to review, assess and report on certain aspects of Burrell’s compliance, internal controls and procedures and training programs.
The independent consultant will report in six and twelve months time and ASIC will be provided with a copy of the reports.
The independent consultant’s report will include:
- the supervision and training of representatives;
- record keeping;
- procedures in ensure that representatives comply with the ‘Know Your Client Rule’; and
- procedures for opening new client accounts and obtaining a sufficient client profile from the clients.
They have also agreed to ensure that proper authority holders will warn clients if Burrell Stockbroking is unable to obtain sufficient information about the client’s personal circumstances.
Burrell Stockbroking has already implemented a number of internal changes to strengthen compliance.
ASIC was concerned about the internal compliance procedures of Burrell Stockbroking, including specifically the degree of compliance with the ‘Know Your Client Rule’ and the associated issues of supervision and training of proper authority holders.
The ‘Know Your Client Rule’ is an important consumer protection tool. It requires a securities adviser who makes a securities recommendation to an investor to have a reasonable basis for doing so, and it requires the adviser to seek information about the person’s investment objectives, financial situation and particular needs.
“ASIC will continue to take regulatory action where its surveillance reviews of securities dealers and others involved in the business of giving securities advice to investors reveal that the appropriate compliance systems and procedures are not in place”, Mr Tanzer said.