Chris Pearce
The Federal Government has confirmed it does not believe further intervention is needed to address practices such as Asgard Wealth Solution’s recent decision to implement its ‘preferred partners program’, which involves charging a mandatory upfront fee of $200,000 to fund managers interested in gaining better access to the organisation’s network of financial planners.
In response to this recent development, Parliamentary Secretary to the Treasurer Chris Pearce said: “The Government considers that the issue of distribution and remuneration arrangements is one for the financial services industry itself to resolve. The Government welcomes efforts by the industry to complement existing statutory requirements by providing guidance and setting rigorous standards for performance.”
However, Shadow Minister for Banking and Financial Services Nick Sherry pushed the case for additional government intervention if the industry and the AustralianSecurities and InvestmentsCommission (ASIC) could not make inroads into this area in the coming 18 months.
“I think it’s a whacking great conflict of interest … Subject to ASIC cleaning up the industry in the next year to 18 months, I don’t think legislation is called for yet, but if the industry isn’t cleaned up in the next short while, further legislation and regulation would be required,” he said.
Investment and FinancialServices Association chief executive Richard Gilbert agreed with Pearce and thought the industry had the ability to decide on these matters for itself.
“The market has to settle these things. If players elect a certain pricing strategy and access strategy, they do so on the basis of what the market will bear, and if they don’t select them right then investors can go somewhere else,” he said.
He stressed that any move like this had to be made within the confines of the Financial Services Reform Act.
Gilbert rejected outright the notion of the industry requiring more legislation as a result of this move by Asgard.
Fiducian Portfolio Services managing director Indy Singh thought a fee like that implemented by Asgard was acceptable as long as it was not a method of guaranteeing inclusion on the organisation’s recommended products list for its advisers.
But he was quick to point out that it is a practice that Fiducian would not adopt.
