David Murray says his proposal to slap new obligations on product providers will result in conflicts of interest in vertically integrated financial advice becoming redundant.
Speaking at Committee for Economic Development of Australia (CEDA) luncheon in Sydney yesterday, Mr Murray acknowledged the “heat” around the issue of institutional ownership of wealth management firms, but rejected the idea that the FSI did not tackle the issue.
Reflecting on his proposal to require financial product manufacturers and distributors to abide by new consumer-focused obligations, Mr Murray said this will solve the problem raised by critics of vertical integration.
“What we’re saying about [the financial] system is that the product manufacturer needs to consider what information is made available, whether advice is needed or not,” Mr Murray said.
“The distributor has to take that on board.
“Once that system is in place, vertical integration doesn’t matter anymore. The same obligations are on everybody whether they’re vertically integrated or not.”
The inquiry chair also said that he intends ASIC to use product intervention powers “sparingly”.
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