The Financial Services Council (FSC) has acknowledged that the Australian Securities and Investments Commission’s (ASIC’s) recent review of vertically integrated institutions and conflicts of interest shows that community and regulator concerns about the quality of financial advice in Australia remain valid.
ASIC’s review of 200 files showed that 130 did not meet the regulator’s record-keeping standards, with 19 being concerning enough to warrant ASIC working with the individual licensees to compensate clients.
The FSC questioned ASIC’s methodology in completing the reviews. ASIC considered file documentation alone in making their findings, while the FSC said that the client and adviser should be consulted before drawing definitive conclusions on the appropriateness of advice.
While there have already been reform to the industry to try and improve the quality of advice, such as the Future of Financial Advice reforms, the Council acknowledged that the review proved that more work needed to be done.
The FSC said that it looked forward to working with ASIC on its proposal to introduce more transparent public reporting on approved product lists.
The Financial Services Minister says the amendments to the SIS Act within the first QAR bill will “clarify the law to affirm the status quo”.
Superannuation funds have thrown their support behind the QAR reforms but want a “clear statement” that they will not be required to check all member SOAs.
In its latest report, the corporate regulator says the deduction of advice fees has led to instances of “inappropriate erosion of members’ balances”.
Financial advice is having a significant impact on how Australians are engaging with the more complex aspects of their superannuation, new findings have shown.
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