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.
“We look forward to working with ASIC on its proposal to introduce more transparent public reporting on approved product lists”
Of course she does. Because it’s another misguided attempt by ASIC to improve consumer outcomes that will never work. It will just drown consumers in even more disclosure. Banks know that consumers will never read it. Just as they never read FSGs or SoAs or the FAR. Banks love those documents because they can be used to bury all sorts of stuff they don’t want consumers to know. It’s the “hide in plain sight” technique and ASIC facilitates it.
If ASIC was serious about improving consumer outcomes they would force the big institutions to stop using “independent sounding” brands like Count, Securitor, Charter, Bridges, Fin Wis, Hillross, RI Advice etc. They would allow non aligned advice firms to call themselves “independent” regardless of which payment options they offer their clients. And they would get rid of the excessive compliance documents that consumers just don’t read. At the moment ASIC is totally playing into the FSC’s hands.
Every time the FSC speak you can just hear the corruption oozing out of them. About time either ASIC or the Royal Commission recommended this corrupt lobby for profit at the expense of customers group was shut down.