Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

No evidence to back quality of independent advice says AMP

amp/financial-planning/productivity-commission/

11 January 2018
| By Mike Taylor |
image
image image
expand image

There is no evidence that ‘independent’ financial advice is of any greater quality than advice from other business models and 'independent' advisers account for the vast majority of cases where customers have unpaid Financial Ombudsman Service determinations, according to AMP Limited.

In a submission filed as part of the Productivity Commission (PC) Inquiry into Competition in the Financial System, AMP Limited has defended vertically integrated financial institutions including in the context of the delivery of financial advice.

The AMP submission said that with the Best Interests Duty introduced under the Future of Financial Advice (FOFA) legislation, vertically-integrated institutions were "working to ensure optimal consumer outcomes in a vertically integrated environment."

In doing so, it cited the fact that AMP had between six and eight different insurance companies listed on each of the Approved Products Lists (APLs) for its different Advice Licensees.

"We believe that this flexibility in product choices enables our financial advisers to offer the right insurance policy for the right client, while acting in the client’s best interests," the submission said. "And, while AMP may be considered as a vertically integrated institution, the majority of the insurance that AMP’s financial advisers choose to recommend to their clients flows to non-AMP products."

The AMP submission also claimed that the significant capital strength contained within vertically-integrated financial instititutions meant they had the resources and brand strength to provide their advisers with high quality professional development, education and training.

"Very importantly, vertically integrated firms are also able to stand behind the advice their advisers give to customers, and facilitate remediation in the event that customers don’t receive advice that is in their best interests," it said. "There are no unpaid FOS determinations relating to a vertically integrated firm."

It said vertical integration also enabled "greater levels of customer access to advice compared with reliance on Independent Financial Advisers (IFA’s) alone", claiming that the "costs to financial advisers and Advice Licensees of providing quality financial advice are significant" and that a disaggregated industry (whether that disaggregation was achieved through separation of ownership or separation of operations) would be more expensive – "especially for advice, which may ultimately reduce the availability of advice."

Dealing with financial advice, the AMP submission finished on the following note: "There is also no evidence that ‘independent’ financial advice is of any greater quality than advice from other business models; indeed advice from ‘independents’ has proved to be the most damaging to consumers and was the driver of the original Ripoll Inquiry. Independents also represent the vast majority of cases where customers have unpaid FOS determinations."

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

The succession dilemma is more than just a matter of commitments.This isn’t simply about younger vs. older advisers. It’...

3 days 6 hours ago

Significant ethical issues there. If a relationship is in the process of breaking down then both parties are likely to b...

4 weeks ago

It's not licensees not putting them on, it's small businesses (that are licensed) that cannot afford to put them on. The...

1 month ago

ASIC has released the results of the latest adviser exam, with August’s pass mark improving on the sitting from a year ago. ...

6 days ago

While the profession continues to see consolidation at the top, Adviser Ratings has compared the business models of Insignia and Entireti and how they are shaping the pro...

2 weeks ago

The inquiry into the collapse of Dixon Advisory and broader wealth management companies by the Senate economics references committee will not be re-adopted. ...

1 week 6 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND