The Financial Services Council has challenged ASIC’s investigative approach used in its review of vertically integrated licensees.
Yesterday, ASIC released a report highlighting that financial institutions need to better manage conflicts of interest after a review of certain institutionally-owned licensees found high levels of in-house product bias despite broad APLs.
In a statement, the FSC responded to the report's release by arguing the methodology used by ASIC in conducting the investigation that led to the report did not include consultation with relevant clients or advisers.
“In the report, ASIC has adopted its own interpretation of how the best interest duty should be applied. In drawing conclusions regarding ‘non-compliant advice’, ASIC has considered file documentation alone; it has not consulted with individual clients or advisers,” the statement said.
“It is the FSC’s view that, before drawing definitive conclusions about the appropriateness of advice, the client and the adviser should be consulted.”
The organisation did, however, acknowledge that “there is still work to be done to address community and regulator concerns” over advice quality in Australia, and that the FSC and licensees would work together with advisers and clients to “make things right”.
“There is already further work underway to improve advice. This includes better monitoring and supervision; improvements in the advice process; and ASIC banning advisers with serious compliance failings,” the statement said.
“ASIC has acknowledged in this review that these reforms have resulted in an improvement in the quality of advice and expects that it will take some time for all reforms to have their full intended effect on the financial advice industry.”
The statement also spoke to the benefits of vertical integration, explaining the model can "provide economies of scale" and that consumers are attracted to the "convenience and safety" of a relationship with a large, vertically integrated provider.
APRA has released its analysis of the choice super sector. ...
ASIC has remain tight-lipped on the process for the forthcoming transition of FASEA but promises that plans to announce it are “imminent”. ...
The Financial Services Council (FSC) has announced the appointment of the Bell Asset Management CEO to its board. ...