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.
While the Financial Advice Association Australia said it supports a performance testing regime “in principle”, it holds reservations about expanding this scope to retirement products.
In a Senate submission, the Financial Services Council said super funds should be able to nudge members on engaging with their super and has cautioned against default placements.
The Joint Associations Working Group, which counts FSC in its ranks, has issued an urgent warning to the government.
Senator Jane Hume will join the speaker lineup at the inaugural Australian Wealth Management Summit.
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