Annual review of wealth management backed by big banks

Three of the four major banks are supporting an annual public reporting regime for the wealth management industry to be overseen by the Australian Securities and Investments Commission (ASIC) and implemented before the end of this year.

Responding to the recommendations of the first report developed by the House of Representatives Standing Committee on Economics – Review of the Four Major Banks, Westpac, the Commonwealth Bank and ANZ have all broadly supported the proposal.

However, National Australia Bank (NAB) has urged a more cautious approach.

The committee’s first report recommended that ASIC “establish an annual public reporting regime for the wealth management industry, by end-2017, to provide detail on:

• The overall quality of the financial advice industry;

• Misconduct in the provision of financial advice by Australian financial services licence (AFSL) holders, their representatives, or employees (including their names and the names of their employer); and

• Consequences for AFSL holders’ representatives guilty of misconduct in the provision of financial advice and, where relevant, the consequences for the AFSL holder that they represent. The committee further recommends that ASIC report this information on an industry and individual service provider basis.

Westpac’s response said it supported the recommendation, noting: “A report on the wealth management industry, which presents reliable and comparable information based on standardised reporting templates and definitions, will improve transparency on any issues in the sector and enable comparison between participants”.

The Commonwealth Bank also supported the recommendation but said it would require detailed discussion with the Government on additional reporting requirements, while ANZ said it supported measures which helped consumers regain trust in the wealth management industry.

By comparison NAB warned that extending a report beyond settled prosecution would be procedurally unfair if cases were still being heard or considered by regulators and suggested an alternative approach based on an annual report of AFSL data such as complaints, levels of compensations and external dispute resolution (EDR) statistics.