The Australian Securities and Investments Commission (ASIC) has told a parliamentary joint committee that conflicted remuneration played a major part in wrongdoing by former Commonwealth Financial Planning (CFP) advisers, ahead of a Senate inquiry into the regulator’s handling of the matter.
Appearing before a routine scheduled public hearing on “gatekeepers and expectation gaps in Australia’s financial system” at the New South Wales State Library, ASIC deputy chairman Peter Kell said the Senate inquiry will justify the Future of Financial Advice (FOFA) reform agenda.
“The media is right to shine a light on the conduct five years ago of CFP because it reminds the public how far we have come in changing financial planning,” Mr Kell said.
“As this committee knows more than most, there is major law reform underway for the financial planning industry, largely in response to major mis-selling episodes.
“Conflicts of interest, arising from commission-based payments, were at the heart of the problems with CFP. The Future of Financial Advice reforms, which start in a few weeks, include a prohibition against commissions going forward and there will be a new duty to act in the client’s best interest.”
More broadly, the deputy chairman said “ASIC welcomes the inquiry and looks forward to the opportunity of providing the inquiry with substantial information on what we do, what we have achieved and what we seek to achieve”.
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