Product manufacturers should stay out of advice

Advisers should not be subject to direction from product manufacturers under the new design, distribution and product intervention powers, according to the Australian Securities and Investments Commission (ASIC).

ASIC senior executive leader, Strategy Group, Greg Kirk has told the Senate Economics Legislation committee that the regulator believes that product manufacturers should not be allowed to get in the way of the professional advice process.

Under questioning from Queensland Labor Senator, Chris Ketter Kirk said ASIC’s position was that the regime was designed to address situations, particularly the design and distribution obligation, where there was not personal advice.

Related News:

“On the basis that whatever you did about design and distribution, if your customers are getting professional, good-quality advice, that is an intervening event, such that they should be entitled to rely on that advice and that those advisers should not be subject to direction from the product manufacturer about what advice they should be giving or who should be included,” he said.

“We would accept that there have been problems with the quality and professional standards in the advice area,” Kirk said. “We think the solution to that is to fix the quality of personal advice rather than substitute this obligation for it. “

“If you had both obligations, the personal advice obligations and the design and distribution obligations, applying to the same transaction I think there would be some tension between them.”

Related Content

Has FASEA devalued prior experience?

With key elements of the Financial Adviser Standards and Ethics Authority (FASEA) regime, including continuing professional development (CPD) having c...Read more

ASIC signals appeal against Westpac decision

The Australian Securities and Investments Commission (AISC) has signalled it will appeal the Federal Court’s determination last year that the co...Read more

Leaking billions, the banks depart wealth management

And then there were none.The great banking adventure in wealth management all but ended on Tuesday, 19 March, 2019 having cost the Commonwealth Bank, ...Read more




Queensland Labor Senator, Chris Ketter Kirk said ASIC’s position was that the regime was designed to address situations, particularly the design and distribution obligation, where there was not personal advice. Better looking into industry funds then too

Industry funds are product makers, so this has to include them. It also I assume would have to include those dealerships that have their own internally badged platforms and so forth, as they are also product providers. So they either dont offer the badged platforms, or they dont allow those licenced with them sell it. Its a can of worms for some dealerships as its the only way they can make money, just as it will be with the industry funds and anyone else that makes products for thier own in house advisers to either advise on specifically or exclusively.

Agree with both above comments but we all know that ASIC are corrupt, biased or inept enough to not include ISA in their cross hairs.

Agreed, industry funds are just as vertically integrated as anyone else but think they hold the moral high ground because their advisers are not paid commissions or bonuses. I would still bet that each adviser is still expected to push the in-house product regardless. No adviser should be an employee of aproduct provider and vertical integration completely banned. Also, all targets for advisers should be abolished including the ridiculous revenue targets which drive the same behaviour by skewing the focus towards the business outcomes.

Advisers in industry funds are measured on the number of SOAs (Statements of advice) they provide this is one of the main KPI's they have. Also they have different SOAs Types eg Risk, Super, Retirement, Debt advice etc what type of advice they are giving which all have $$$ attached to each plan or advice they are giving. We measure our advisers on the number of clients they """ help "" """$$$$''''''

Industry funds don't ever say they don't get commissions eg "Our advisers don't receive Commissions" the Super Funds still get Commissions from Insurance companies.

The real story is why are there so many industry funds when they don't all perform that great why not and yet they spend a lot of money always comparing closed products on retail funds.

ASIC has made their position clear. I wonder how the FPA goes when they make submissions to ASIC. Clearly ASIC would also frown on this relationship and take things with a grain of salt. i.e " Here's yet another proposal straight from the FPA the group that represents ABC product and those other firms before a Royal Commission....we chuck that in the bin"

Add new comment