Yesterday ASIC announced it has accepted an enforceable undertaking from Findex after the regulator found clients of its Financial Index Australia (FIA) subsidiary were being transferred to more expensive products without sufficient reason.
FIA subsequently issued a statement to ifa explaining that the concerns outlined in the EU are confined to a small portion of the firm’s client base and are not a result of any client complaints.
“At no stage have there been any concerns about the security of client funds, or the way they have been invested or supervised. ASIC’s concerns predominantly relate to the fullness of the advice documentation process,” an FIA spokesperson said
“Clients accepted full disclosure on fees and our recommendations were supported by thorough research provided by external leading industry professionals with the aim of delivering quality outcomes for our clients; they are not dictated by price.”
According to the statement, the performance of the funds has generally been consistently above benchmark over the entire period that the recommendations were made.
“It is unfortunate that ASIC’s notice period referred to in the EU did not take into account updated versions of FIA’s policies and procedures,” the spokesperson said.
ASIC acknowledges in the EU that FIA had already implemented a number of its own initiatives to address most, if not all the deficiencies, prior to entering into the EU, the statement said.
“Our clients can be assured that their interests are FIA’s highest priority and if they have not already been contacted by us, then they are not impacted by the EU,” the spokesperson said.
Last year, Findex and FIA were penalised for using the terms ‘‘independent’ and ‘non-aligned’ on websites. Findex responded to the penalty claiming it was not the group’s intention to mislead clients.
Check out the EU Compliance Update recently posted on ASIC’s website. “Small portion” of the client base = 99%…
Findex would be in the top 5 “worst” money managers in the market and their stealthy sales pitches should have been banned by ASIC. Now they come out and say only a few clients were affected – what utter crap. They paid their advisers incentives to churn super policies from external to internal platforms which had much higher fees !!!! Please……..and you still just get a slap on the wrist.
Typical Findex. Would we expect any different ? And then just like our pollies, roll out the excuses….
[i] “performance of the funds has generally been consistently above benchmark over the entire period that the recommendations were made. “[/i]
Past performance is not… you know how it goes..
If you’re using performance as a key metric in product replacement. Then you’re gonna have a bad time.. Time for a new Compliance Manager.
They must have done nothing wrong to get an EU , all a mistake !!! They product which the clients got sold wasn’t an inhouse one was it?
sold non in house in most cases
This reeks. Half truths and bending of truth to exonerate themselves in the public eye. The fact they state that clients were given full disclosure of fees goes to the heart of the problem. The majority of the public don’t understand the fees.
How is an organisation allowed to deny all their shortcomings in the media when they have already signed a legally Enforceable Undertaking with ASIC to amend their ways…
Their funding partner seems to be considering options
What I am surprised about is that last week a guy got banned for a property in a SMSF not meeting bid and this week the systemic issue is a EU.
I am one confused planner!
everyone is confused. it depends on the day, and the mood in the office and how good the coffee was and whether the guy got bumped on the way into the train or not
Any whether they are related to any ASIC employees
Seriously!!! Lets go back to step 1 in our responsibility as professionals…. [b]Clients best interest[/b][u][/u]. The updated timing of compliance and procedures manual is a mute point. The EU document reads as systemic not isolated incidents.
If you want to get to the truth of this matter – go to the media release section of ASIC’s website and you can read the EU – of interest is clause 2.10 – Clients were typically moved from their existing Non In-House Product to a more expensive In-House Product without adequate justification or explanation.
And thus the problem with in house products. Anyone selling in house products has conflicts of interest. Be it all the banks, insurance companies, etc and the IFA’s. If you own a product and flog it as essentially the only product then there will always be issues.
Advisers and Product ownership MUST be separated to solve any of these issues.
When will the government / ASIC, anyone involved do anything about it rather than throw another crap load of compliance at the same problem that doesn’t work.