Medcraft questions asset-based fees
ASIC chairman Greg Medcraft has flagged a "misalignment of interests" between financial advisers who charge asset-based fees and clients who are entering retirement.
Speaking at the Centre for International Finance and Regulation symposium in Sydney yesterday, Mr Medcraft appeared to endorse elements of a paper presented by Macquarie University academic Professor Geoff Kingston titled Regulation of Financial plans and Allocated Pensions.
“[Mr Kingston’s] research [that shows] the misalignment of interests for financial advisers who charge asset-based with risk-profiled clients nearing retirement or early stages of retirement I think is very interesting,” said Mr Medcraft.
The ASIC chairman also took the opportunity to reiterate his concerns with the financial advice sector.
“In terms of conduct regulation, clearly these are issues being considered by David Murray’s [Financial System Inquiry] – in particular the role of financial advisers,” said Mr Medcraft.
“At ASIC we regard financial advice as a very high-risk sector and one that is an ongoing focus,” he said.
Asset-based fees have been a contentious topic in the wake of FOFA, with Financial Service Council chief executive John Brogden labelling Industry Super Australia’s attempts to conflate them with commissions as a “furphy” earlier in the year.
“Here's the difference: they go up and down if your assets go down – and a lot of people's assets went down in recent times. It's a furphy to suggest that commissions continue with asset-based fees – they don't,” said Mr Brogden at the time.
IOOF announces new CEO
IOOF has appointed a permanent chief executive following the resignation of Chri...
Class action against Evans Dixon under consideration
A law firm has signalled intentions to launch a class action against wealth mana...
BT executive appointed to FSC board
The Financial Services Council has brought on a BT general manager with 25 years...