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Insto ownership on ASIC's radar

Institutional ownership of licences is firmly under the regulator's spotlight and may present disclosure issues, according to an Australian Securities and Investments Commission (ASIC) executive.

Responding to questions at the Boutique Financial Planning Principals Group (BFP) conference in Brisbane on Friday, ASIC senior manager, financial advisers, Trevor Clarke said the regulator is “absolutely aware” of the doubts in consumers' minds about who ultimately 'owns' their adviser.

“It does exist as an issue, clearly. The question is whether it's a misleading disclosure issue,” said Mr Clarke.

The comments come after a survey of 3,000 financial advice clients by Roy Morgan Research found consumers were confused about institutional ownership.

Roy Morgan found that 51 per cent of CBA-owned Financial Wisdom's clients thought their adviser was 'independent' rather than 'working for a financial institution'.

Mr Clarke said ensuring the client is confident and informed is a strategic priority for ASIC – and to be properly informed, clients “need to know who they're dealing with”.

The issue is likely to become even more prominent within the Future of Financial Advice environment, he added.


Mr Clarke said he would continue to raise the issue with the senior executive team at ASIC, especially considering it is an issue that “keeps coming at us”.

“Conflicts of interest exist, clearly. But whether or not those conflicts lead to bad advice is one of those areas that's subjective,” he said.

ASIC has its hands tied to an extent, because section 923A of the Corporations Act (2001) stipulates that remuneration, not ownership, is the determining factor of 'independence'.

“The use of the term has been defined in the law, and it's quite a narrow definition … If the law was wider and it started to talk about ownership, the type of choice people have – that's a different thing,” he said.

The leadership of the BFP is set to meet with the senior executives of ASIC's financial advice team in Sydney in the coming weeks to discuss the issue.