Yesterday, ASIC released a report highlighting that financial institutions need to better manage conflicts of interest after a review of certain institutionally-owned licensees found high levels of in-house product bias despite broad APLs.
In a statement, the FSC responded to the report’s release by arguing the methodology used by ASIC in conducting the investigation that led to the report did not include consultation with relevant clients or advisers.
“In the report, ASIC has adopted its own interpretation of how the best interest duty should be applied. In drawing conclusions regarding ‘non-compliant advice’, ASIC has considered file documentation alone; it has not consulted with individual clients or advisers,” the statement said.
“It is the FSC’s view that, before drawing definitive conclusions about the appropriateness of advice, the client and the adviser should be consulted.”
The organisation did, however, acknowledge that “there is still work to be done to address community and regulator concerns” over advice quality in Australia, and that the FSC and licensees would work together with advisers and clients to “make things right”.
“There is already further work underway to improve advice. This includes better monitoring and supervision; improvements in the advice process; and ASIC banning advisers with serious compliance failings,” the statement said.
“ASIC has acknowledged in this review that these reforms have resulted in an improvement in the quality of advice and expects that it will take some time for all reforms to have their full intended effect on the financial advice industry.”
The statement also spoke to the benefits of vertical integration, explaining the model can “provide economies of scale” and that consumers are attracted to the “convenience and safety” of a relationship with a large, vertically integrated provider.
Double standards of FSC are just nauseating. They would have to get a consultant in to define integrity.
I work for one of these Licencee and yes my APL has a wide choice of Fund Managers. But my platform of Choice is CFS, not my choice of manager. Within CFS FirstChoice has over 115 option and 40+ managers, who I choose is up to me and I choose the best in that asset class for my clients, very rarely would that be CFS manager.
So did ASIC really check what the client has or did they just look at the headline product which does not tell the true story.
Why do I choose FirstChoice, it is because it is low cost, great service, great back office admin, good reporting and a wealth of information available to me to help me to service and look after my clients.
Not to mention that “know your product” rule also.
Ouch, that ASIC torch carries heat. The FSC and a nasty few of its insurance CEO members fed advisers to the wolves. ASIC is currently chasing ex Guardian advisers down wombat holes for “bad advice”, apparently applying standards retrospectively. The big accountancy firm doing the job is trousering enormous fees!!. The FSC loved the ASIC ( now disputed ) “churn claims” that resulted, it fed their ideological mantra, and the long term desire by some insurers.to abolish commissions. There’s an easy answer Ms loane – just call the bankies salesman, be like AMP and salary everyone and only sell your stuff. Drop the pretence of APLs in a bank!
What a joke! Could the FSC get anymore dodgy and corrupt. They didn’t challenge ASIC’s report 413 which we all know was a targeted and fictitious report on Life insurance churn. The FSC knew the real truth in this and chose to keep it to themselves so that they could corruptly push through the LIF and misguide parliament for greater profit. But now when the obvious is revealed by ASIC on vertical integration they challenge the methodology! I hope to see Sally Loane and the other cartel members on the stand at the Royal Inquiry.
It’s about time we saw headlines such as ” ASIC inaction results in investors losses” “Millions lost due to ASIC ” etc. Their inaction and reluctance to investigate rogue directors and companies has resulted in more losses than anything done by the appropriately licenced financial advice community.
Yep. Sooner or later the property market will significantly correct and people who followed the unlicensed investment advice of real estate agents, accountants, and mortgage brokers will lose gazillions. Serious questions should be asked of ASIC as to why they turned a blind eye to this.
the govt are pedalling as fast as they can to keep property prices up.
So the FSC tries to weasel out of this by challenging ASIC’s methodology, even thought it is obvious to everyone what is happening.
Yet when ASIC published their deeply flawed report into insurance churn, the FSC promoted it as “evidence” to justify legalising collusive cartel behaviour?