Any levy imposed on advisers through the proposed ASIC funding model should go towards funding independent product researchers, and not ASIC employees, the AIOFP has said.
In a submission to the Treasury’s proposals paper, the AIOFP said all too often advisers are blamed when an investment product fails, while others higher up the supply chain “escape accountability”.
The proposed $960-per-adviser levy should therefore be used to fund an external panel of non-conflicted research analysts who can make decisions about products, the AIOFP said.
“Product failure, the resultant consumer losses and ASIC investigation procedures have been the greatest failures of the industry over the past 10 years, and it could have been avoided,” the submission states.
“An adviser acting on what they believe to be accurate information and having some trust in the product approval/management process cannot be blamed. It is not a failure of the advice process; it is a failure of the regulatory, approval and product management process.
“We recommend that if any levy is imposed on advisers, it should be used to fund the research panel, which will eliminate the massively-conflicted culture of manufacturers ‘shopping around’ and paying for a favourable rating.”
AIOFP said this will be the best use of advisers’ money, as it tackles the “real” industry problems.
“Product failure has been the greatest cost to consumer savings and therefore ASIC investigation budgets. Continually imposing compliance and education burdens on advisers will have limited effect if the real reasons for product failure are not addressed and resolved,” the AIOFP said.
“Unless something is done about these systemic flaws in the administration of products, consumers will continue to lose their savings. ASIC will continue to focus on negative events/exceeding budgets and those who are responsible for this past misery will escape accountability.”
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