Independent platform and investment company, Domacom has challenged claims by AMP Limited that only vertically-integrated financial services organisations have the capacity to invest in new and high quality financial advice solutions, arguing that the assertion is contradicted by recent events.
Domacom has issued a rejoinder to the AMP Limited submission to the Financial Systems Inquiry in which it claims the assertions based on the virtues of vertical integration are "utter rubbish".
"There are plenty of examples of vertically aligned advisers going off the rails, just as there have been in the independent ranks, but more often the damage is far greater, just look at the losses inflicted by Commonwealth Financial Planning advisers only recently coming to light," the Domacom rejoinder said. "Those financial disasters emanating from independent firms like Storm generally do not occur without significant help from errant fund managers and banks with poor lending processes."
"There are bad apples in every profession, but independent operators live or die on their performance. They are building a business of value and often their own quality of retirement is dependent on their performance over the longer term."
The Domacom rejoinder then went on to assert that "there is no question that companies building products should not be providing advice".
"There is always going to be a conflict or the potential for a conflict and this should be removed," it said. "Independents run more efficient businesses as there is nowhere for lazy people to hide."
With respect to vertical integration, the AMP submission stated: "AMP strongly supports a broad choice of financial advice models including a vertically integrated model of advice. Only vertically integrated companies have the financial capacity to invest in the development of new and high quality financial advice solutions for consumers, which ensure strong competition and innovation in the market. Vertically integrated companies with significant capital strength have the resources and brand strength to provide their advisers with high quality professional development, education and training."