The Australian Securities and Investments Commission (ASIC) must update its conflicted remuneration guidance to include its position on vertical integration, according to a non-institutional dealer group.
The regulator overlooked the issue in its release of Future of Financial Advice regulatory guidance this week, despite some worrying activity in the market, Synchron director Don Trapnell told ifa.
“It is our understanding at least one institutional licensee is actually offering reductions in dealer fees to any adviser who writes 80 per cent of their business with a life insurance provider from within the same network,” Trapnell said.
“Here we have financial advisers who are being given a very strong financial incentive to place the majority of their business with one life insurance company, irrespective of their clients’ needs and irrespective of the merits and features of the product,” he added.
Describing this practice as “absolutely wrong” and “conflicted remuneration in purest form,” the director of the 200 adviser-plus licensee said regulation of this space was needed.
“ASIC should step in and state that there should be no formal favour between life companies and recommendations from licensees,” he said.
Rather than any deliberate omission from the guidance, Trapnell said he thinks the issue of vertical integration is just “not on ASIC’s radar”.
“If ASIC was aware I imagine they’d say it’s not right,” he said.
The big four bank has estimated it will be paying around $8 million to around 8,...
FASEA has conceded that its code of ethics is difficult for compliance managers ...
The majority of claims made under retail life insurance policies are now able to...