TheAustralian Securities and Investments Commission(ASIC) will act against individual firms named in a damning report released this week on the quality of financial planning advice.
The report, the result of a year-long investigation into the planning industry by ASIC and the Australian Consumers’ Association (ACA), found many financial plans prepared by advisers were “grossly inadequate”, while others were “mediocre, lazy documents”.
The investigation involved consumers secretly approaching advisers to obtain financial plans, which were then tested by a panel of industry experts.
The report says only two out of a total of 124 plans were considered ‘very good’, while 23 where considered ‘good’ and 36 ‘okay’.
The remaining plans were considered ‘borderline’ or worse, including 21 that were rated ‘poor’ and 12, from 10 different groups, which were considered ‘very poor’.
ASIC’s executive director of consumer protection, Peter Kell, says the regulator will examine each of the 10 groups that were named in the report as having produced ‘very poor’ plans.
The groups include the ANZ Bank, Securitor, Charter, AMP, Bell Potter, PACT, JB Were, Protax, Tolhurst Noall and Mawsons.
According to Kell, ASIC is already in talks with at least one group about “significant compliance issues”.
The Financial Planning Association (FPA) has cautiously welcomed ASIC’s move.
“I am confident that ASIC will take a constructive approach and give feedback to individual firms,” FPA chief executive Ken Breakspear says.
However, ASIC has indicated it is prepared to take a tough stance with the groups.
“In the past two years, ASIC has removed 62 financial advisers from the industry, and a further 10 have received jail terms. We will be carefully assessing the information from the survey to determine whether any enforcement action will be taken,” Kell says.
“The survey is a wake-up call to the financial advising industry that improvements are needed and in particular, that more consistent quality needs to be achieved.”
