The review – which forms part of ASIC’s broader Wealth Management Project – focused on the conduct of the financial advice arms of AMP, ANZ, CBA, NAB and Westpac.
It arose out of serious concerns about past adviser misconduct, ASIC said, with the objective of lifting standards in major financial advice providers.
As a result of the review, the regulator said it has found a number of areas of concern where further improvements need to be made, including:
• failure to notify ASIC about serious non-compliance concerns regarding adviser conduct;
• significant delays between the institution first becoming aware of the misconduct and reporting it to ASIC;
• inadequate background and reference-checking processes; and
• inadequate audit processes to assess whether the advice complied with the ‘best interest’ duty and other obligations.
ASIC deputy chairman Peter Kell said, “Failure or delay in notifying ASIC of suspected serious non-compliant conduct significantly affects our ability to take appropriate enforcement or other regulatory action.
“More importantly, it may also result in an increased risk of customer detriment as so-called ‘bad apple’ advisers continue to work in the industry.
“Strengthening breach reporting requirements will be an important issue in the current review of ASIC’s enforcement powers announced by government in October 2016.”
More to come.
Safe harbour requires advisers to have ‘relevant expertise’ before they can provide advice. I wonder how many ‘analysts’ at ASIC have given any financial advice or even completed RG 146. If not, how is it ok for these unqualified experts to review the work done by experts? Seems nonsensical and contradictory. Shouldn’t the government apply the same rule on ASIC as they do for advisers?
The regulator is a disgrace to the financial community and its clients. The bad give the good a bad reputation within the industry with the help of the ASIC.
“more to come” is probably right on the money!
yes, unless an AFSL is suspended, no one will care. The banks executives never faced a retail client in their life, its just numbers to them, no care in the world. I’m surprised why people are shocked…..
There are innumerable causes for these issues from internal bureaucracy, poor processes, lack of internal courage, reliance on self-serving legal advice or the misrepresentation of distribution as advice. Some individuals’ and organisations’ believe that the cost and consequences of making appropriate checks outweighs the benefit of increasing adviser numbers. Others prioritise short term benefits over long term consequence. As one of the members of the Working Group that helped ASIC to develop the Reference Checking Guide for the Financial Services Industry I was shocked at how little effort the businesses and organisations behind the Guide (including the FSC and FPA) put into promoting it or encouraging its use. One might also suggest that the report also highlights the critical limitations of internal compliance resources. With all due respect to the value of improved breach reporting guidelines, until Licensee Management and Executives are personally held to account for their decisions it may be unreasonable to expect different outcomes.
Again I call for orderly (reasonable time frame) forced divestment of Advice Providers by Product Manufactures, that is abolish vertical integration. We advisers as the scapegoats are being punished for the poor conduct of others, namely the management of the Product Manufactures. The regulators are too afraid to attack the problem at its source. Suspend just one AFSL and warn the others that this is the consequence and see how quickly they will toe the line.
I love the idea of abolishing vertical integration and would like to explore some of the many potential unintended consequences.
For example, Licensees carry significant risk for typically low or no profit. Product manufacturers choose to subsidise their Licensees which is passed on to AR’s, permitting lower operational costs factored into consumer pricing.
How will the lower socioeconomic segment be affected if fees for advice increased?
Lol, nobody is shocked.
But we let the FSC call the shots, filled with these instos haha.
And the big guys continue to operate poorly at the cost of their clients with immunity from the regulators