Share sale fraud, OFA changes and what to do about them
In this month’s Compliance Radar, we take stock of two updates from ASIC – a warning about a rise in share sale fraud and new requirements for ongoing fee arrangements (OFA).
Market intermediaries should be on guard as share sale fraud rises
In its latest Market Integrity Update, ASIC is calling for extra vigilance as instances of share sale fraud rise, affecting Australian investors and financial services licensees. As a matter of urgency, market intermediaries should review their account opening and customer due diligence controls to find and strengthen potential vulnerabilities.
One such control is to check the geographics of IP addresses against applicants’ physical addresses to spot discrepancies. However, fraudsters can simply use a virtual private network (VPN) to mask or even spoof their locations. LAB’s VPN Detection solution combats this by alerting staff when a customer applies using a VPN. While this does not necessarily indicate fraud, it signals that more investigation is required.
ASIC releases changes to OFA obligations
Also from ASIC, Info Sheet 286 outlines new obligations and consents associated with ongoing fee arrangements (OFAs). This comes into force in early 2025 and will affect those who provide personal advice to retail clients.
ASIC defines these professionals as ‘fee recipients’, that is:
- An Australian financial services (AFS) licensee or its representative who enters into an ongoing fee arrangement with a client, or
- If the licensee or representative has transferred (or ‘assigned’) their rights under the arrangement, the person who currently holds those rights (i.e. the ‘assignee’).
These groups must ensure they have written consent from clients that meets ASIC requirements. This document must be signed in the timeframe that starts 60 days before the agreed reference or anniversary day and ends 150 days after.
For those managing numerous clients, the hefty administrative burden associated with this requirement can be minimised using automation.
With LAB Group’s initiate API, applicable dates are automatically inserted into the onboarding documents, like the OFA. This automation is part of a fully integrated platform that addresses all aspects of the client lifecycle.
For instance, the Statement of Advice (SOA) capability lets advisors effortlessly capture client data and add it automatically to their financial systems ecosystem. Dynamic forms let them easily collect and automatically analyse client responses to generate risk scores, categorise investor risk profiles and sets all relevant client keys and demographics. Additionally, advisers can populate mail-merged SOA templates with client risk scores, entirely eliminating the need for error-prone and time-consuming manual data input.
For more information on how LAB Group’s suite of technology solutions can streamline your compliance processes and add additional layers of protection, book a demonstration today.
