THE credibility of the recent report into the quality of financial planning advice by theAustralian Securities and Investments Commission(ASIC) and the Australian Consumers’ Association (ACA) has been thrown into question, after the two groups were forced to admit a major error in the rating of one planning business.
The error led to Community and Corporate Financial Services (ComCorp), a Brisbane-based planning business, being rated as ‘poor’ in the report, when it should have been rated as ‘good’.
ComCorp was given the ‘poor’ rating after being accused by ASIC and the ACA of not supplying an Advisory Services Guide (ASG) to a consumer.
But in an embarrassing about-face, ASIC and the ACA wrote to ComCorp earlier this month conceding the group did supply an ASG, and that it should have been rated as ‘good’.
The survey involved consumers being sent out to secretly obtain financial plans from advisers.
ASIC and the ACA claim that before releasing their report, they double- checked with each consumer who reported not being given an ASG.
But the ComCorp mistake was identified only after the report was released when the consumer discovered the ASG among their papers.
The general manager of ComCorp, Andrew Zietara, says the group is considering whether to seek damages from ASIC and the ACA.
The executive director of consumer protection at ASIC, Peter Kell, says the error was an isolated incident, but could not give a guarantee last week that similar mistakes had not been made with the rating of other planning groups.
According to Zietara, the mistake puts the entire report under a cloud.
“The mistake does cast doubt on the validity of the entire survey, particularly for groups downgraded because they did not supply an ASG,” he says.
TheFinancial Planning Association(FPA), which has been critical of the report, said last week it was concerned about the impact of the mistake on ComCorp’s business, but declined to comment on whether the error casts doubt on the entire ASIC/ACA study.
