Garry Weaven
A West Australian-based risk adviser has criticised the regulator in a submission to a Federal parliamentary inquiry for an alleged bias in favour of industry funds in taking out its enforceable undertaking (EU) against AMP.
An authorised representative of Wangarra-based InvestWest Life Brokerage, Peter Brien told the current Senate inquiry into the Structure and Operation of the Superannuation Industry that the Australian Securities and Investments Commission (ASIC) is effectively being selective in applying its interpretation of Financial Services Reform (FSR) across the industry.
Brien’s submission, one of 153 submissions made ahead of the submissions’ deadline last week, claims, in particular, that the Industry Funds Services (IFS) planning arm Industry Fund Financial Planning (IFFP) is a beneficiary of ASIC’s bias.
He claims that IFFP is being allowed to operate in “direct contravention” of the same FSR regulation that resulted in ASIC issuing an EU to AMP, following a post-shadow shopping investigation of the dealer group by the regulator.
“It seems clear to me that the FSG [Financial Services Guide] distributed by the dealer group effective from March 9 this year clearly limits the scope of the advice its planners offer, in direct contravention to ASIC’s view of the law” that resulted in AMP being issued with an EU.
His submission included an extract from the document, namely that clients should “please be aware that the advice is based on limited information that may be incomplete” and “may not be entirely appropriate to your overall financial situation, needs and objectives”.
The extract went on to inform clients that “the advice does not take any other factors (other than the difference in fees and charges applying in the funds being investigated) into consideration.
Brien also submits that the document “also points out that there is no direct cost to members for the services detailed in the FSG, as these are met as part of the administration services provided by participating industry funds”.
“In other words, only participating industry funds can be recommended and these funds pay IFFP to provide such advice,” he said.
IFS executive chair Garry Weaven rejected Brien’s appeal. Weaven also rejected Brien’s primary appeal to ASIC to apply the law equally and impose an EU on IFFP.
He said the FSG that Brien refers to is “clearly sub-headed Superannuation Fee Comparison Service (SFCS), and, as such, does not apply to our financial planners who give actual financial advice.
“It’s the FSG for our SFCS, which is a department within IFFP that exists specifically because [our] people find it impossible to work out the actual fees of these products from financial planning advice and product disclosure advice.”
He said the “guidelines that control the service, which, incidentally, has been specifically vetted by ASIC, clearly prevent any person from giving financial advice” to a client.
“It does not provide recommendations as to joining or leaving a particular fund; but merely provides an expert analysis of how comparative fees work.”
