The client compensation processes entered into by Macquarie will likely fall short of what is required and the big financial group should, instead, initiate something similar to the Commonwealth Bank's Open Advice Review Program, according to law firm, Maurice Blackburn.
The firm has used its submission to the Senate Inquiry into the Scrutiny of Financial Advice to claim that the client compensation scheme entered into by Macquarie suffers from the same deficiencies as the remediation process initially entered into by the Commonwealth Bank.
"There are no timelines for reviews and decisions on compensation, there is no commitment to providing client files or other documents and no safeguards that clients' interests will be met during the assessment process (only that they will have access to advice after a decision is made)," the submission said.
"Our experience to date in assisting people who have registered with the MEL remediation process is that many are told that they are not eligible under the scheme, client files and documents are not readily provided and often don't exist, and many complaints have not progressed to date," it said.
The submission then went on to claim that the Commonwealth "may offer consumers reasonable compensation for their financial losses".
Elsewhere in its submission, Maurice Blackburn also cautioned against the influence of vertical integration on advice stating, "We remain very concerned about the continuing practice of vertically integrated advice whereby advisers recommend investment products of entities to which they are associated to the exclusion of better performing non-affiliated products".
"To address this problem, it is suggested that financial planners be required to demonstrate that they consider and recommend both affiliated and non-affiliated products," it said. "A measure could be that they must have recommended product lists that include a balance of affiliated and non-affiliated products or perhaps a minimum proportion of non-affiliated products."
"In addition, if a Statement of Advice (SOA) recommends a product affiliated with a financial adviser, that should be disclosed and the SOA should show a comparison with a non-affiliated product to demonstrate that the affiliated product is more appropriate."
