Will ASIC scrutinise industry fund advice?
The Australian Securities and Investments Commission (ASIC) has not ruled out scrutinising advice provided by industry superannuation funds in the same manner in which it scrutinised that provided by the major banks and AMP Limited.
Under questioning during a hearing of the Joint Parliamentary Committee on Corporations and Financial Services, ASIC deputy chairman, Peter Kell, was specifically asked whether having looked at the banks, the regulator would look at the industry funds.
The ASIC deputy chairman said that ASIC had not done equivalent work with respect to other vertically-integrated entities, including industry funds.
“… this was in the first instance part of our project looking at advice in wealth management in the big five,” Kell said. “But, as I indicated, we think there are lessons here for other large firms. We will be looking at how, for example, the approved products list (APL) transparency issue can be rolled out to some of those larger firms and how they are working.”
Kell said that ASIC was looking at other aspects of advice and performance in some other large firms.
“But have we done exactly this sort of work in relation to other firms? Not at this point in time,” he said. “It is an interesting bit of work in that it does suggest that there are some other parts of the industry that we may also want to have a look at, but I haven't got the project in mind just yet.”
Queensland Liberal Party member, Bert Van Manen, pointed out that roughly a third of the industry was made up of industry superannuation funds and asked whether ASIC would be looking at advice in the space.
Kell said that ASIC was interested in how advice was being provided within the funds and whether it was general advice or personal advice “and what sort of models those funds [are] using in relation to advice”.
“That's something of strong interest to us,” he said. “We continue to have discussions with those funds and others about, for example, how scaled advice might best be delivered. But your question about exactly where you draw the line is a live one that we're talking to the whole industry about, because people are constantly interested in looking at how they can provide advice and when they're going to fall within a general advice or a personal advice model.”
Recommended for you
As the industry navigates the fallout from recent product failures, two major AFSLs have detailed their APL selection process and relationship with research houses, warning a selection error could “destroy” a licensee.
The impending retirement of financial advisers in their 50s could see the profession face significant succession challenges over the coming decade and younger advisers may not be the answer.
With a third of AFSLs being solo advisers, how can they navigate key person risk and ensure they are still attractive propositions for buyers when it comes to their succession planning?
A quarter of advisers who commenced on the FAR within the last two years have already switched licensees or practices, adding validity to practice owners’ professional year (PY) concerns.
