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ASIC accepts legally enforceable undertaking from UBS
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ASIC accepts legally enforceable undertaking from UBS

A subsidiary of the global investment bank UBS has been slated for its failings in its financial advice systems that left more than 700 investors without appropriate guidance.

UBS Wealth Management Australia has signed an enforceable undertaking with the croproate regular that outlines agreed facts about the poor state of its systems in notifying advisers when a statement of advice was required.

ASIC’s role will be to help modify key aspects of the investment bank’s compliance culture and frameworks and remedy past compliance failures in the provision of financial advice to retail clients.

ASIC chairman, Tony D’Aloisio, said the action against UBS Wealth Management sends a broad message to the market that ASIC expects advisers to have proper systems in place to comply with the Corporations Act relating to statements of advice.

The action enables ASIC to provides a “speedy process of redress and compensation for UBS WMA clients who suffered loss because they were not provided with an adequate Statement of Advice”, he said.

D’Aloisio said it also gives the executives and Board of UBS WMA “a clear timetable within which to make improvements in the conduct of its advice business”.

ASIC said that between January 2006 and 31 March 2010, UBS WMA failed to provide Statements of Advice to 764 retail clients who invested in a category of financial products classified by UBS WMA as structured products. The failure to provide Statements of Advice also extended to retail clients who invested in additional classes of financial products.

The enforceable undertaking by ASIC sets out how UBS intends to rectify these issues and how it will establish a claims process for clients who potentially received personal financial product advice in circumstances where a Statement of Advice was required but was not provided, ASIC said.

UBS WMA will now write to the relevant clients and provide them with a claim form, which will facilitate any claim for compensation that the clients may be entitled to make, arising from the fact that UBS WMA failed to provide the required Statement of Advice.

The action also requires UBS WMA to complete a program to address its failure to foster and remedy compliance deficiencies. The program will be thoroughly reviewed by an independent expert who will regularly report to ASIC and the final expert’s report will be provided within 14 months, following which UBS WMA will implement any final requirements.

UBS cooperated fully with ASIC and said it has addressed some of the issues in a restructure, including the appointment of a number of senior executives.

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