In a note to subscribers, Bell Potter analyst Lafitani Sotiriou cautioned that the royal commission’s review of financial advice, commencing on Monday, 16th April, will present a challenge for vertically integrated licensees.
“Financial advice is front and centre of the royal commission into banking. AMP and businesses IFL is buying from ANZ will be included in the hearing,” the analyst said.
“This follows an enforceable undertaking enter[ed] into by ANZ Wealth last week in relation to fees being charged where services weren’t provided. We see significant risk to this review for the fully integrated players, which are also the target of a Productivity Commission review due out later this year.”
Mr Sotiriou added that the enforceable undertakings ASIC accepted from two CBA dealer groups (Commonwealth Financial Planning and BW Financial Advice) were also a bad sign for AMP, a company he has previously warned would be challenged by the royal commission.
“We continue to see significant risk regarding AMP as it is set to feature in three of the four categories as part of the royal commission. It seems likely given what’s happened with ANZ Wealth and now CBA Wealth that we can anticipate some action against AMP,” the analyst said.
Additionally, Mr Sotiriou noted that two of the ANZ Wealth dealer groups being purchased by IOOF are set to appear before the commission, and he reiterated his previous comments that the company’s acquisition of the ANZ Wealth dealer groups presents a risk.
“IOOF, following the ANZ Wealth acquisition, is now lumped with the mature, less agile and fully integrated players that the advisers are moving away from. We see significant risk in the acquisition,” Mr Sotiriou said.
The whole RC watch dog is barking up the wrong tree. These companies create and distribute products for profit, fact.That’s called commercialism, and last time I checked my economic theory, that’s legal and what is supposed to happen in a capitalist society. Somehow this whole thing is skewed as if we exist in some special socialist sector, and that everything must be the same across the board. And for those of you who espouse this should be the case, how come the ISA advice providers have not come under scrutiny? It is also fact that their rep’s are kept to production and retention kpi’s on their own vertically integrated funds and products, just like bank planners. You cannot tell me that they would not also have dubious advice in amongst their tens of thousands of advice documents and perhaps more tellingly, lack thereof. But that’s right, they got a special exemption to our laws under the prior Labor government who also appointed Medcraft & Kell, who to date have utterly ineptly ignored that sector altogether. Absolute BS this whole industry regulation, scrutiny and now this farcical RC! Makes me sick to the gut to see our professional associations and the lack lustre Lib’s twiddle their thumbs when this rot carries on
I would venture that over 95% of clients seeing an Industry Super Fund planner ends up rolling into or staying in an Industry Super Fund. How isnt that vertical integration at work? Where’s the report from ASIC on this? Given the poor insurance definitions across many Industry Super Funds, how can the advisers employed by these very same Funds meet their Best Interest Duty by recommending the insurance offerings from these funds. We regularly find that the quality of cover is significantly lower, while the cost of premiums is significantly higher when you move away from the cookie-cutter default cover of 2 units life/tpd & IP with 90 day waits and 2 yr benefit periods. The premiums balloon.
Do they get around these issues by only having their own product on the APL?? Havent the retail advice providers just been caned by ASIC for this? Sounds like different set of rules for different groups depending on ASICs view of your business model.
I suggest that Mr Sotiriou actually do some research before sprouting crap.
No this analyst clearly does not have an agenda against IOOF. Were Bell’s not included involved in a recent transaction?? One must question the validity of Bell’s research integrity.
Haha, this is hilarious. Must be written by IOOF. The stock is down over -15% since deal was announced, so its been the right call.
The trend is there, this is spot on.
Broken record