The chair of the parliament’s committee on financial services and corporations has signalled that while there is concern about some individual financial advisers, product providers need scrutiny too.
Speaking at the SMSF Association conference in Melbourne yesterday, Senator David Fawcett endorsed the FSI recommendation to introduce product intervention powers for ASIC.
He said additional powers for ASIC over manufacturers would allow the regulator to adopt a proactive – rather than reactive – strategy and broaden focus beyond gatekeepers and intermediaries.
"We're concerned about the individual adviser but we're also concerned about the product they're dealing with, how suitable it is, we're also concerned about the culture of the companies they work with and we're concerned about the regulator," Senator Fawcett said.
"We look at things like the potential product intervention as one of those additional defences."
The South Australian senator also suggested the regulation of financial services could take a page out of the aviation industry’s book.
A more proactive ASIC is unlikely to resemble the "Therapeutic Goods Administration where every product gets [a] stamp of approval," but would rather be akin to the aviation industry where "everyone gets on an aircraft and they don't expect it to be the fastest or [perform] aerobatics but they do expect to get there safely every time", he said.
"Whereas for someone who wants more extreme performance or wants to fly in the experimental category, the degree of disclosure around the risk associated with that [will be] mandated by the regulator."
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