Shadow shoppers seeking financial planning advice for the Australian Securities and Investments Commission’s (ASIC) current shadow shopping campaign have completed their work.
ASIC confirmed to Money Management last week that it had in its possession approximately 300 Statements of Advice (SOA) secretly collected from planning practices chosen at random by research firm Roy Morgan.
ASIC will now collate and analyse the data and deliver an assessment of adviser competence in the new choice of superannuation environment, an assessment ASIC confirmed will be released late this month, or early in March.
The results of the campaign will be eagerly awaited by the financial planning industry, which is still suffering from the fallout of ASIC’s infamous 2003 shadow shopper campaign, and last year’s super switching report.
Released in February 2003, and carried out in conjunction with the Australian Consumers’ Association, the results of the covert assessment of planner competency triggered a media frenzy when it dismissed almost half of the 150-odd financial plans it scrutinised as ‘borderline’ to ‘very poor’.
Then last year, just after the release of several surveys that showed most consumers were happy with the service they received from their planners, ASIC revealed the results of its super switching report. This report found that 90 per cent of the 4,900 super switching recommendations examined by ASIC advised a move to a fund run by a party related to the adviser.
The veracity of the methodology of both of these damning reports has been criticised by the planning industry. The first shadow shopping report came under particular fire for not involving shadow shoppers who were genuine financial planning customers.
But the current Roy Morgan-managed campaign has used 300 real consumers with genuine super switching needs.
And if planners fail in the eyes of ASIC once more, they could be in for some heavy punishment.
ASIC assistant director of financial services Richard Farmer warned in May last year that the Government could be forced to toughen-up the Financial Services Reform Act if the planning industry fails the test.
“We cannot afford what happened in shadow shopper one,” Farmer said.
