Speaking at Committee for Economic Development of Australia (CEDA) luncheon in Sydney yesterday, Mr Murray acknowledged the “heat” around the issue of institutional ownership of wealth management firms, but rejected the idea that the FSI did not tackle the issue.
Reflecting on his proposal to require financial product manufacturers and distributors to abide by new consumer-focused obligations, Mr Murray said this will solve the problem raised by critics of vertical integration.
“What we’re saying about [the financial] system is that the product manufacturer needs to consider what information is made available, whether advice is needed or not,” Mr Murray said.
“The distributor has to take that on board.
“Once that system is in place, vertical integration doesn’t matter anymore. The same obligations are on everybody whether they’re vertically integrated or not.”
The inquiry chair also said that he intends ASIC to use product intervention powers “sparingly”.
I agree with both the two previous comments. Murray is totally nave if he thinks that general obligations will move vertically integrated entities to impartial advice and product recommendations. The act is that there are already easily circumvented set of legal obligations in place and we have a totally corrupt and conflicted advice/product industry. The only things that will ever make a difference are :
1)Strict obligation to act in clients best interests; and
2) Break the vertically integrated model. Companies need to decide if they are in the “advice business” or “product manufacturing business”, but not both.
Murray was totally the wrong man for the job.
Absolutely correct Patrick, and further to that he also purchased the Colonial business for $8b that 14 years later is still only returning an EBIT of around 10 of the 14 year old purchase price. One wonders what Murray’s wealth business model inside CBA was motivated by over all those years??? In-house FUM had nothing to do with it did it David???
The truth is most clients are simply overwhelmed by the volume of disclosure documents, FSG, PDS, SOA and a further disclosure of ownership will have little impact. Murray built the vertically integrated business at CBA, of course he would never recommend this to be a failed business model. He was the wrong man for the job as he has a conflict of interest between preserving his reputation as a banker and doing the right thing.
What a load of rubbish