Concerns over compliance at Perth-based Neo Financial Solutions have resulted in regulators imposing an enforceable undertaking.

The Australian Securities and Investments Commission (ASIC) conducted a surveillance operation on the dealer group and its 160 advisers from July last year to this February.

It examined Neo’s compliance and risk management framework, plus financial product advice provided and audits.

ASIC found the dealer group had inadequate resources to undertake compliance obligations, including checking if advisers were acting in clients’ best interests.

Faults included failing to address important client objectives, failing to make reasonable enquiries to determine all relevant client circumstances, and not fully considering the consequences of replacing products.

Neo must hire an independent expert to assess and make recommendations on its risk management and compliance frameworks.

ASIC Deputy Chairman Peter Kell says the poor compliance framework resulted in advice that did not meet clients’ best interests.

“We expect licensees to dedicate sufficient resources to appropriately monitor and supervise high-risk and newly appointed authorised representatives and to remedy poor advice in a timely manner,” he said.