AMP takes swing at independents
As tensions flare within the Genesys network, AMP has staunchly defended its business model and told the Murray Inquiry that advice provided by IFAs is “the most damaging to consumers”.
With the FSI having asked for consultation on the issue of vertical integration, AMP’s second submission does not mince its words, hitting out at allegations that non-aligned advice is in any way superior and arguing that vertical integrators offer additional value to the “Australian community”.
“There is no evidence that ‘independent’ advice is of any greater quality than advice from other business models; indeed advice from ‘independents’ has proved to be the most damaging to consumers and was the driver of the original Ripoll Inquiry,” the submission asserts.
“Only vertically integrated companies have the financial capacity to invest in the development of new and high quality financial advice solutions for consumers, which ensure strong competition and innovation in the market.”
Vertically integrated groups are better placed to assist ASIC with monitoring and compliance, the submission goes on to say, rather than the corporate regulator trying to “engage with thousands of individual firms”.
The submission contends that developments such as AMP’s announcement of mandated higher education standards and services such as PD days can only be financed by vertically integrated dealer groups, thereby producing consumer-facing benefits.
In addition, it argues for the status quo, asking that “the current regulatory model that supports a range of industry structures in relation to advice, including vertically integrated companies” be allowed to continue.
Responding to the submission on social media, boutique adviser Tim Mackay of Quantum Financial argued the underlying premise of AMP’s assertion about independent advice is invalid.
"To claim that an independent licensee can somehow cut a swathe of financial ruin through Australian society without institutional help is ridiculous,” Mr Mackay said.
The submission comes as a number of advisers within AMP’s Genesys dealer group are demanding greater “independence” and product recommendation flexibility, with some threatening to leave the licensee.
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