The Financial Services Council has responded to comments made in a Productivity Commission draft report regarding the impact of vertical integration on competition within financial services.
On Thursday, the Productivity Commission (PC) released its draft report into competition in the Australian financial system, in which it cautioned that vertical integration creates “inherent conflicts of interest”.
The PC’s comments came only two weeks after an ASIC review into vertical integration similarly found advisers aligned with the four major banks and AMP exhibited a bias towards in-house products.
Responding to questions from ifa, FSC chief executive Sally Loane said vertical integration can offer consumers a number of benefits, but that it’s important they assess their options and are comfortable with the adviser they choose to see.
“Consumers have lots of choice when it comes to seeking financial advice in Australia. They can go through their superannuation fund, an independent financial advice business, a dealer group aligned with a larger institution or through a bank branded dealer group,” she said.
“Whatever structure a consumer chooses it is important they do their research to ensure they are comfortable with how they will be charged and whether their adviser has links to product providers it recommends.”
Ms Loane said the FSC and its members “welcome regulatory scrutiny” to ensure clients are appropriately serviced.
“We look forward to working with ASIC on its proposal to introduce more transparent public reporting on approved product lists,” she added.
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