In its submission to the Senate’s ‘scrutiny of financial advice’ inquiry, the corporate regulator announced it will be running a formal surveillance project until June, focusing on “vertically integrated businesses which combine product manufacturers with advice groups”.
ASIC’s Investment Managers and Superannuation team will be examining management of conflicts of interest while the Financial Advice team will be on the lookout for product mis-selling and advice failures.
However, the submission also argues there are “benefits to vertical integration” – naming the ability for these companies to draw on greater resources for the purposes of consumer compensation, and reminds parliament that there is “no requirement in Australia for advisers to offer independent advice”.
“While required to act in the best interests of clients when providing personal advice, and to prefer the interests of the client over their own interests or those of related parties, advisers are not required to review all products available in the market before making a recommendation and are not restricted from advising on a limited range of house products under an approved product list,” the submission states.
It also resubmitted its previous suggestion that product-aligned advisers be required to describe themselves as “restricted” or otherwise make it clearer to consumers that they have limitations on their product recommendation advice.
The adviser register – which will include information about the owner or parent company of an adviser’s licensee – will also go some way to eradicating consumer confusion, the submission states.
ASIC chairman Greg Medcraft announced in late 2014 that the regulator will be focusing its 2015 surveillance on the six largest financial planning companies.
Interested in finding out more about non-aligned advice? The ifa Business Strategy Day will provide the answers: http://www.businessstrategyday.com.au/
Its about time.
How can you give advice in the BEST INTERESTS of your Clients and not provide INDEPENDENT advice – they are complimentary not supplementary.
While required to act in the best interests of clients when providing personal advice, & to prefer the interests of the client over their own interests or those of related parties, advisers are not required to review all products available in the market before making a recommendation & are not restricted from advising on a limited range of house products under an APL, the submission states.
This statement can apply to both vertically integrated advisers & independent advisers.
ASIC also resubmitted its previous suggestion that product-aligned advisers be required to describe themselves as restricted or otherwise make it clearer to consumers that they have limitations on their product recommendation advice.
For ASIC to be consistent and impartial requires that independent advisers with a restricted APL (most likely all of them) will also need to be referred to as restricted in the products that they can advise on.
That seems fair. Now that should incite a riot.
What a load of rubbish. ABCFP is right it is about making a positive difference to peoples financial future.
ASIC are doing nothing and the major banks and fund managers are calling the shots
ASIC has concerns about vertical integration yet concedes that VI providers may have more money to pay compensation. Says it all really. Nice royal mess you’ve created and ensures you’ll be kept busy for many years yet trying to justify your existence.
Ah, the witch hunt has begun. I remember when financial planning was making a difference to the lives of others to ensure the betterment of their future.
We can forget about sensible strategies and creativity. Today there are so many snouts in the trough feeding off negativity created by so few who have done nothing to improve this industry.