ASIC should approve adviser remuneration: David Murray

Future Fund chairman David Murray has called for the remuneration of brokers and financial planners to be approved by the Australian Securities and Investments Commission.

Murray’s said this approval was necessary because there have been “very significant distortions historically in the quality of product and the quality of advice where these are based on commission selling”.

“The regulator should approve not just remuneration within financial sector organisations but also the remuneration of brokers and commission salespeople who originate to those financial institutions.”

Addressing a Finsia lunchtime function yesterday, he said the regulator “should look at the rate of growth of remuneration relative to the rate of growth of internal capital of the financial institution".

“The regulator needs to see whether there is some alignment as a result of the board’s policies, and where there is not the regulator might make an adjustment,” he said.

Murray also took a dig at ongoing calls for a national debate on executive remuneration, particularly in light of redundancies announced by clothing group Pacific Brands.

“A national debate about remuneration will do absolutely nothing at this point in the crisis to solve anything ... because the main issue now is liquidity in the global financial system and the decline in the pace of global growth."

He added that to “attack the remuneration issue without looking at the regulatory alignment and the operation of the system, is a mistake".

During his presentation, Murray described the Federal Government’s implementation of the ADI liabilities guarantee in Australia as “absolutely necessary and timely”.

“In the grand scheme of things, this was the way to restore liquidity to the Australian banking system, overcome a reliance on foreign capital and switch the banking system to more reliance on deposits," he said.