ASIC's September 2026 Financial Advice Update Flags PI Insurance, Reference Checks, and Super Advice

Key Takeaways

• ASIC's latest Financial Advice Update covers professional year guidance, reference checking compliance gaps, inadequate professional indemnity insurance among licensees, poor-quality superannuation advice, and the qualifications standard, alongside a lengthy list of enforcement actions involving the Shield and First Guardian Master Funds.
• Compliance teams at AFS licensees must urgently review PI insurance adequacy, reference checking processes, and adviser registration and qualification status, as ASIC has demonstrated active surveillance and a willingness to take licence cancellation and banning action against non-compliant firms and individuals.

Deep Dive

This update signals ASIC's continued focus on foundational licensee obligations that underpin adviser quality and consumer protection. The professional year guidance (INFO 297) clarifies record-keeping, supervisor eligibility, and licensee responsibilities for candidates progressing toward becoming fully qualified relevant providers, and licensees should ensure onboarding and supervision frameworks align with the Corporations (Work and Training Professional Year Standard) Determination 2018. Separately, ASIC's reminder on reference checking is notable: breach reporting data shows licensees are failing to obtain references before authorizing representatives, in breach of the mandatory ASIC Protocol (fully in effect since 1 March 2025). Non-compliance carries civil penalty exposure and potential licence suspension or cancellation, making this a priority remediation area.

The PI insurance surveillance findings are particularly instructive: of 10 licensees flagged for holding less than AUD $2 Million in cover, nine had simply made reporting errors on form FS70, while one had a genuine coverage gap and is now winding up. This highlights both a data-accuracy risk (incorrect FS70 lodgements could trigger unwarranted regulatory scrutiny) and a substantive compliance risk under RG 126, which requires PI cover scaled to retail revenue up to AUD $20 Million. Licensees should audit FS70 submissions for accuracy and confirm PI coverage meets RG 126 minimums as part of annual financial statement preparation.

On superannuation advice, ASIC's FSCP outcomes reveal recurring failures: advisers not verifying existing super arrangements, overlooking prior contributions or pensions, and inadequate documentation—conduct that breached the Code of Ethics' Diligence value in at least one case. Licensees should strengthen training on contribution caps, transfer balance caps, and rollover suitability, and ensure supervision processes can detect and remediate deficient advice before it causes client harm. The qualifications standard review (effective 1 January 2026) and registration reminders further underscore that AFS licensees cannot rely on ASIC's fictitious worked examples as a substitute for individualized qualification assessments, and must proactively manage relevant provider registration status to avoid strict liability offenses.

Finally, the extensive enforcement summary—including licence cancellations, multi-year bannings, and criminal charges tied to the Shield Master Fund and First Guardian Master Fund collapses—demonstrates ASIC's heightened enforcement tempo against best-interest duty breaches, conflicted remuneration, and misleading advice documentation. Compliance teams should treat this as a clear signal to review exposure to high-risk managed investment schemes recommended by advisers, strengthen best-interest duty controls, and ensure robust monitoring of authorized representatives, particularly those transferring from licensees with known compliance issues.

Source: Australian Securities and Investments Commission