Ombudsman gets into bank advisers
FINANCIAL advisers working for banks have been criticised by the Banking Ombudsman for "overselling" their funds.
The ombudsman says there is an increasing number of complaints being made about bank advisers, and it is cause for concern.
The rising number of complaints comes against a background of banks capturing a majority of funds flow into the industry and a downturn in markets.
According to figures from research house Morningstar, banks have been top fund gathers in the past year. Two of them, WestpacTrust and ASB Bank, have been hugely successful at attracting money into their mortgage funds.
In the 12 months to September 31 more than $351 million, representing 40 per cent of total retail funds was invested in their mortgage funds.
Banking Ombudsman senior investigator Susan Taylor says bank advisers have been overselling funds on past performance. However, with negative returns in the past 18 months, customers have felt misled.
ASB Bank's chief manager managed funds, Roger Perry, says he is not surprised the Banking Ombudsman is getting more complaints about bank-managed fund products.
He expects customers will start questioning their investments after 18 months of negative returns.
While he acknowledges ASB does get some complaints, and the number has been increasing, Perry says the advice process has been improving over the years and it is now very robust.
Financial Planners and Insurance Advisers Association chief executive, Phillip Matthews, says one of the criticisms in the ombudsman's report is over banks' prospecting process.
Matthews says advisers need to be careful about the way they prospect, or find, new clients.
"Advisers should ensure they are as ethical in their method of prospecting as they are in the way the way they look after a prospect once they become a client," he says.
Recommended for you
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
