The corporate regulator issued an update today on its ‘wealth management project’ – a probe into the six largest financial planning companies, which was formed off the back of media and parliamentary scrutiny of conflicts of interest within vertical integration.
According to a statement from ASIC deputy chair Peter Kell, released this morning, the investigation has turned up “multiple instances of licensees charging clients for financial advice, including annual advice reviews, where the advice was not provided”.
“Most of the fees have been charged as part of a client’s service agreement with their financial adviser,” the statement revealed.
Mr Kell said the investigation is ongoing and that further action against offending licensees may be taken.
“ASIC will consider all regulatory options, including enforcement action, where we find evidence of breaches of the law relating to fees being charged where no advice service has been provided,” Mr Kell said.
“We will look to ensure that advice licensees follow a proper process of customer remediation and reimbursement of fees where such breaches have occurred.”
In January, the corporate regulator revealed it has tasked two regulatory teams with investigating the six largest financial advice providers, on the lookout for miselling and advice failures.
In its submission to the Senate’s ‘scrutiny of financial advice’ inquiry, the regulator said the surveillance project would be underway until June, on the lookout for mis-selling and advice failures.
“The inherent conflict of interest created by vertical integration may not be readily apparent to clients, particularly if the product manufacturer and advice parts of the business operate under separate licences and business names,” the submission said.
Steve A “havent bothered to look outside the big 6”? are you f***ing joking mate? thats all they have done for the past 30 years. it took a senate investigation into their own performance to force them to look under the hood of these corporate crooks. short memories on this website.
Also, have they investigated any other dealer groups? Is this happening everywhere and ASIC haven’t bothered to look outside the “Big 6”?
This is all very unclear. As Tim Ross said, if a review is offered and the offer declined by the client, are ASIC including this as “…charging advice to clients without providing advice.”?
I’d want some more info before jumping to conclusions on this.
The “six largest vertically-integrated advice providers”
If the public don’t get it by now, they never will.
It’s not planner education. It’s not the odd rogue planner. It’s not commissions.
It’s systemic corporate offending for financial gain at all costs.
Wolves in sheep’s clothing.
History will show that this may be the tip of the iceberg. The big question is how did this not be noticed before. Again, management, compliance and the adviser, who gets the final kick. About time those above advice level are called to question. Sales targets do not equal good advice and possible theft–that’s nice for fees charged without service. And guess what, FDS letters just got justification. Interesting to see the names and compo figures and outcomes.
Gee !! Well I never………….!
So there are abuses in the fee charging lot. Of course there are and always will be, particularly with money up front too. The client loses that money if they change adviser and its difficult for the client to punish the adviser. OTOH, with commission on a risk product, the client punishes the adviser by either cancelling or moving the trail to another adviser.
Now is not providing advice for pre-paid fees constitute conflicted remuneration ?
The ASIC’s statement needs some clarity – it reads that they are taking issue with fees which are charged ‘as part of the client’s service agreement with their financial adviser’ … these are the fees and services as outlined in the annual FDS.
Is it the non provision of said review, or the non offer of a review which is the issue?
So much for ASIC taking a measured approach to enforcement – it hardly seems fair in view of the lack of clarity they have provided and the relative confusion and fog which still exists around this topic.
I hope we can have some clarity on this as the statement ASIC has made will be a concern to many.
Is ASIC now saying that if a client elects not to have a review appointment etc then we have to refund the ongoing fee????
I am in the independent space but if this is the outcome I see no value in offering any service to a client.
Perhaps we will get to the point where you get a refund on your insurance if you dont make a claim.