The Australian Securities and Investments Commission’s (ASIC’s) review into vertically integrated financial advice institutions and conflicts of interest shows that community and regulator concerns about the quality of advice in Australia remains an issue, according to the Financial Services Council (FSC).
ASIC’s Report 562 revealed that 130 files reviewed by the regulator did not meet its standard for record-keeping. Nineteen of the 200 files reviewed they had significant concerns that would require the relevant individual licensees to work directly with ASIC to compensate clients.
While there has already been considerable legislative reform to improve the quality of financial advice, such as the Future of Financial Advice Reforms, the FSC acknowledged that ASIC’s discovery showed that more need to be done.
The Council welcomed ASIC’s proposal to introduce more transparent public reporting on approved product lists. It also said that further reforms to ethical and education standards in the industry, which would be phased in from next year, should lead to improved quality of advice.
“The FSC and its members welcome regulatory scrutiny to ensure that consumers are receiving the highest standard of advice, and to ensure conflicts of interest are managed in a way that puts consumers first,” the FSC said.
The Council highlighted the benefits of vertically integrated institutions, saying that they could provide economies of scale and other benefits for customers.