Known as an ‘Enforcible Undertaking’ (EU), the deal follows a review by the Australian Securities and Investments Commission (ASIC) into HSBC’s performance in providing advice on retail structured products.
The review found instances where its advisers had obtained little or no information about a clients’ relevant personal circumstances. It also raised concerns that advice may not have been appropriate for the clients’ circumstances or needs.
As a result of the ASIC review, HSBC undertook its own investigation into the retail clients who had invested in structured products during the same period and found that there were potential deficiencies in the advice provided to approximately 464 of the 557 clients affected.
Remediation plan
Under the deal reached with ASIC, HSBC has agreed to appoint an independent expert to oversee the implementation of a remediation plan which includes a compensation scheme and the provision of fee free personal advice to help the affected clients.
ASIC deputy chairman Peter Kell said: “One of the fundamental obligations of financial advisers is to ensure that financial products are appropriate for the consumers’ needs and circumstances. Where that doesn’t occur, ASIC will intervene to ensure that affected clients are reviewed and compensated fairly and consistently.
“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,” Kell said.
