Financial planners, particularly those employed by the major banks, will once again be in the cross-hairs of the Australian Securities and Investments Commission (ASIC) over the next 12 months, according to the latest ASIC Corporate Plan.
The Corporate Plan, released by the regulator this week, reflects the degree to which it has closely followed the course of key Senate Committees and the fall-out from the controversies which have impacted Commonwealth Financial Planning, Macquarie Bank, National Australia Bank and IOOF.
The plan also suggests the regulator continues to have a problem with vertically integrated organisations with the financial services sector.
Discussing the actions which it is likely to be taking directly impacting the financial planning space this year, the ASIC Corporate Plan said the regulator would be reviewing advice in large, vertically-integrated institutions, “including how the largest banks deal with ‘bad apple’ advisers.
It said it would also seek to identify inappropriate conduct by “assessing breach reports and reports of misconduct and deciding whether we need to act further — we expect licensees to report breaches promptly so we can rectify problems with individual entities quickly and effectively”.
Looking at the financial planning space more generally, the ASIC plan said that conflicts of interest and variable competence continued to “result in poor advice that is not in clients’ best interests” and suggested this might lead to significant investor and financial consumer loss In 2015—16.
“We see structural change heightening the importance of quality financial advice, and will focus our attention in this area and on enhancing the professionalism of financial advisers to meet the long-term challenge,” it said.
Dealing with vertical integration, it said it could contribute to conflicts of interest and low investor confidence.
“We have seen poor advice in large institutions and in smaller firms — for example, in life insurance advice practices and through the mis-selling of financial products to investors and consumers,” it said.
It said that to improve the quality of financial advice, ASIC would be acting to address conflicted advice, misaligned incentives and inadequate risk management, particularly in large, vertically-integrated institutions.
