In a submission to the Treasury’s proposals paper, the AIOFP said all too often advisers are blamed when an investment product fails, while others higher up the supply chain “escape accountability”.
The proposed $960-per-adviser levy should therefore be used to fund an external panel of non-conflicted research analysts who can make decisions about products, the AIOFP said.
“Product failure, the resultant consumer losses and ASIC investigation procedures have been the greatest failures of the industry over the past 10 years, and it could have been avoided,” the submission states.
“An adviser acting on what they believe to be accurate information and having some trust in the product approval/management process cannot be blamed. It is not a failure of the advice process; it is a failure of the regulatory, approval and product management process.
“We recommend that if any levy is imposed on advisers, it should be used to fund the research panel, which will eliminate the massively-conflicted culture of manufacturers ‘shopping around’ and paying for a favourable rating.”
AIOFP said this will be the best use of advisers’ money, as it tackles the “real” industry problems.
“Product failure has been the greatest cost to consumer savings and therefore ASIC investigation budgets. Continually imposing compliance and education burdens on advisers will have limited effect if the real reasons for product failure are not addressed and resolved,” the AIOFP said.
“Unless something is done about these systemic flaws in the administration of products, consumers will continue to lose their savings. ASIC will continue to focus on negative events/exceeding budgets and those who are responsible for this past misery will escape accountability.”
This is a brilliant idea. Medico’s have the TGA to screen medicines to make sure they are fit for purpose. We should have the same thing. Doctors and pharmacists are never blamed for a drug that is defective. Because they have a proper regulatory body, which does its job properly. If we have to fund ASIC, then we need to make sure the dollars are put into the right areas. Not wasted on ideological pursuits that do nothing to improve our profession and protect the public, which is 90% of what I see from ASIC at the moment.
You can call it a levy , when in effect its a financial services tax by stealth , ultimately the cost of which will be borne by clients . What either party ,( advisor or client) will get in return is questionable .
AIOFP spokespeople are living in LaLa land…with a sense of entitlement that beggars belief. ASIC is NOT there for YOUR benefit – it serves the public, who want to it crack down HARD on dumb, self-serving, biased by dollars sales processes disguised as “advice”. If you don’t get that yet, it’s time to get out.
I completely agree Philip, your comment re AIOFP are on the money. Funding a research panel is laughable, for an institutionally owned adviser (and you all are…) the responsibility rests on the compliance board of your licensee.
Simple – stop recommending products!
The banks and amp can absorb this 2.2 mil as this is a CEO’s monthly wage. Or Maybe the FSC can pass the hat around at the Xmas party? Our wages being cut from Jan 1 2018 the generosity is outstanding so far.
We already have good quality research groups unattached to product manufacturers. There just needs to be seperation between research and manufacturing, where researchers can’t provide recommendations on products manufactured by a related entity.
If it’s about the levy itself, then the industry doesn’t need another cost imposed, and therefore additional cost to the provision of advice.
The market is heading in the right direction, advisers are making the right changes to their businesses and evaluating the partners to their business. We don’t need more bureaucracy.
What product are they referring to…investment or insurance…I’ve never seen an insurance product fail so that consumers lose their savings…again another article that doesn’t clearly segregate investment from insurance…
What a joke – I thought we were in the advice game ? Product is the end of the chain – are AIOFP solely focused on product