General advice provision ‘extremely difficult’ for banks

Responding to questions from ifa, Smart Compliance principal Brett Walker said the enforceable undertakings ASIC accepted from the Commonwealth Bank and ANZ were potentially the result of two driving factors.

“Banks may authorise staff to provide general – not personal – advice so they can inform customers about products such as the in-house products at issue here. It is likely the conversation with customer has (i) identified existing super and (ii) involved some sort of implied or explicit recommendation that the customer consider rolling over to the in-house product,” he said.

“The failure to perform adequate comparison of existing product and then compare it to the in-house product (after all, how can the staff do that within context of the conversation described in the [ASIC] media release?) is probably another key concern – apart from staff not actually being authorised to give personal advice in the first place.”

Mr Walker added that it will be difficult for banks to stop staff who are authorised to provide general advice from providing personal advice in the future due to the way the banks currently operate.

“Banks will need to better script the processes and train staff about how not to fall into the personal advice trap,” he said.

“But this is extremely difficult to do (in my opinion) within the context of gathering data from people that identifies existing holdings in a product or product class that is at the heart of the in-house distribution drive.”