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.

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“… 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.”

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In other words, if we are forced to do something, we might. It seems strange that the big 5 are dragged through the mud but entities like the union funds provide personal advice, but hide behind calling it general advice. If ASIC thinks it is bad the advisers under the big 5 are recommending in house products around 70% of the time how do they feel about union fund advisers who recommend union funds 100% of the time? Will union funds be forced to expand their APL's past only union funds? Bit of a double standard there Mr Kell.

The toxic, anti-adviser culture at ASIC is clearly biased towards industry funds. Look at the Sample Insurance SOA they produced - they included the brand name 'Industry Fund' in their recommendations. They are so one-eyed they didn't realise how inappropriate that was. However their latest promotion of well-known anti-adviser, newspaper flogger, Scott Pape/Barefoot Investor (who hides behind general advice disclaimers to avoid the laws which provide protection for consumers) really takes the cake. I think the basic rule of thumb at ASIC is this - if it's detrimental to financial planners, then thumbs up. Check this out:

ASIC recommends LIC's for all, wow, that's pretty amazing stuff from a regulator. I don't even see any General advice warnings, in fact Pape says it's appropriate if you have no debt and about 2k in your bank - so he's just personalised the advice under the law. I always queried why the Moneysmart website e.g. TTR calculators were in clients interests - whose checking the calculators? Are clients acting without advice? Farce continues.

Its really important this gets investigated further, this regulator is going way beyond its core functions, then they want us to contribute to their budget, which would mean we pay papey to give free advice with no regulation. ASIC isnt there to educate, thats for other departments and us to do.

Perfectly fine to ignore 1/3 of advice. ASIC is not required to review the whole market. Well played to industry funds.

Don't forget Kell was appointed by a Labor PM, so has that ideological background as displayed time & again. Avoiding scrutiny of ISA is right up there with endorsing the launch of the farcical CPA AFSL, the intentionally misleading LIF 'research' and subsequent legislation, promotion of industry funds in sample SoA's and adviser bashing at every opportunity. His tenure needs to be ended, preferably painfully.

How can they have not looked into Industry Fund advice!?! It seems ASIC are only concerned with Advisers (ex-Industry fund) and thats it. They never seem to police other sectors, such as dodgy Stock Brokers, or shonky company directors of ASX listed companies, particularly those who fleece investors in the micro cap space. They definitely have a chip on their shoulder, thats for sure.

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