Full plan not part of advice survey: ASIC

TheAustralian Securities and Investments Commission’s (ASIC) director of financial services Ian Johnston has made comments that may throw into question the methodology and findings of the damning report into the quality of advice it produced with the Australian Consumers’ Association (ACA) earlier this year.

In an interview with education providerIntegratecfor a training video, Johnston says shadow shoppers participating in the quality of advice survey were instructed to obtain a full comprehensive financial plan from advisers, even though some of them may not have had a need for a full service.

“One of the things that has shown up in the shadow shopping survey was the view that it was perhaps unrealistic for each of those shadow shoppers to go in and ask for a comprehensive financial plan which was their instruction, as for some of them their need was not that they have a fully comprehensive and complex plan,” Johnston says in the video.

Speaking toMoney Management, Johnston says he was referring to the view of some members in the industry, and not the view of the regulator, and that ASIC stands by the methodology used in the survey.

“I acknowledge that someone doesn’t always need comprehensive advice and that is where the concept of scalability comes in, but the way the survey was constructed was that someone was to ask for a comprehensive plan and that was done deliberately,” Johnston says.

Johnston says that in the case a client did not need the entire service, the onus was on the adviser to point out that in their circumstances they did not need a comprehensive plan.

But when asked if this came into the measurement of the survey results, he said he could not be sure.

The comments may throw doubt on the report, in which the ACA claimed some plans were “grossly inadequate”, while others were “mediocre, lazy documents that fell short of providing the consumer with truly comprehensive guidance”.