ASIC’s latest shadow shopper research survey on the financial planning sector was a welcome springboard for educating the industry and consumers, industry body heads said yesterday.
The corporate regulator will play a key role in upcoming nationwide roadshows organised by the Association of Financial Advisers (AFA) and FPA to help their respective members better follow ASIC’s criteria for the industry.
AFA chief executive Richard Klipin said ASIC’s participation in AFA conferences would also help members as the regulator’s code of conduct, as set out in the government’s Future of Financial Advice (FOFA) reform legislation, unfolded.
“As far as the AFA is concerned, we’re working closely with the regulator,” Klipin said.
“We were part of the shadow shop process, and we’re delighted that senior ASIC officials will be in front of our members over the next few months taking people through the detail of shadow shop, the way to improve and the things to look out for.”
In 58 per cent of advice examples, consumers had received adequate advice, according to ASIC’s “279 Shadow shopping study of financial advice” report. However, 39 per cent of the examples were poor.
FPA chief Mark Rantall said the organisation had organised a series of Beyond the Shadow Shopper workshops to be held across the country, starting in about five weeks.
“We’ve established a national educational forum to be held in May, at which our focus will be on taking the learning out of shadow shop and looking at how we can build that into a best-practice advice forum and workshop in conjunction with ASIC and [the Financial Ombudsman Service], their findings and, specifically, their criteria,” Rantall said.
However, the Industry Super Network (ISN) seized on the results to decry the asset-based fee model used by some planners.
“Importantly, the report provides conclusive evidence of the conflicting impact of asset-based fees, as none of the pieces of advice rated as good were remunerated by commissions or ongoing asset-based fees,” ISN strategy manager Robbie Campo said.
“The study shows that the connection between quality of advice and the method of adviser remuneration is clearly inextricable. The results repudiate the claims that asset-based fees are unproblematic.”
The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) said ASIC’s report highlighted the challenge of raising professional standards across the advice industry.
“SPAA will be working closely with ASIC to make sure that competency in the provision of financial advice is raised,” SPAA chief executive Andrea Slattery said.
Slattery said it was crucial Australians using self-managed super funds received advice.
“In many ways, the FOFA reforms, especially the best interests duty, will be a definite step forward in tackling this issue. Conflicted remuneration continues to be a source of poor advice and SPAA reasserts its view that all commissions for financial products that are embedded or unable to be unbundled are banned,” she said.
