ASIC said that this follows surveillance which it commenced because of a “significant increase in adviser numbers at SMSF Advisers Network in a relatively short period of time”.

As part of the surveillance, ASIC said that it reviewed a number of SMSF Advisers Network’s client files.

“This review identified concerns including that some of SMSF Advisers Network’s advisers had failed to demonstrate compliance with the best interest duty and related obligations. ASIC found that the statement of advice (SOA) documents relied heavily on templated wording and many of the client files lacked evidence to support the advisers’ recommendations that clients establish an SMSF,” it said.

“As a result, ASIC was concerned that SMSF Advisers Network had inadequate supervision processes in place to ensure that advice provided by its representatives was in the best interests of clients.”

The additional licence conditions require SMSF Advisers Network to engage an independent expert to review and test the compliance of advice provided by SMSF Advisers Network’s advisers, and to assess whether it has appropriate supervision mechanisms in place to ensure that its advisers are meeting the best interest duty and related obligations.

“Where shortfalls in supervision arrangements are identified, the independent expert will make recommendations to address the deficiencies,” ASIC said.

ASIC added that AFS licensees are responsible for the conduct of their representatives and that it expects licensees to have adequate supervision arrangements in place to ensure that their representatives comply with the law when providing financial product advice to consumers.

“It is essential that AFS licensees’ resources remain adequate, especially during periods of strong growth, to ensure compliance with their obligations. ASIC will continue to monitor movements in adviser numbers when targeting future surveillance work,” it stated.

“When providing SMSF advice, financial advisers are required to adequately demonstrate why an SMSF is appropriate for the client and why it is in the client’s best interests. ASIC expects financial advisers to use their skills, expertise and judgement in determining whether an SMSF is appropriate and not rely solely on client direction.”

The SMSF Advisers Network has held an AFS licence since February 2013. In mid-February, SMSF Adviser reported that the SMSF Advisers Network had total of 1,087 professionals under its licence.

It saw a spike in adviser numbers last year when a total of 412 advisers joined its licence, doubling the number of advisers that joined in 2017.

A number of the accountant-focused licences last year saw a jump in adviser numbers due to the incoming education standards for advisers.

If accountants wanted to be recognised as an existing provider under the FASEA standards, they needed to be authorised by a licence by the beginning of this year.

Hayes Knight director Greg Hayes previously told SMSF Adviser that the deadline “forced many accountants who were previously undecided about licensing to make a decision in order to take advantage of the requirements”.