Can you trust your bank to give you the most unbiased financial advice? ASIC isn’t so sure.
They then identified areas that need improvement to manage apparent “conflicts of interest”.
The review found that:
- 79% of the financial products on the firms’ approved products lists (APL) were external products
- 21% on the APL were internal or ‘in-house’ products
- However, 68% of clients’ funds were invested in in-house products.
In a statement released today, the ASIC review noted that “the split between internal and external product sales varied across different licensees and across different types of financial products. For example, it was more pronounced for platforms compared to direct investments.”
“However, in most cases there was a clear weighting in the products recommended by advisers towards in-house products.”
Consumers may have chosen the in-house products out of convenience and easy access, however these conflicts of interest are “inherent” in vertically integrated firms, according to ASIC.
Peter Kell, Acting ASIC Chair, said that ASIC will consult with the financial advice industry to introduce more transparent public reporting on approved product lists.
“There is ongoing work focusing on remediation where advice-related failures have led to poor customer outcomes, and the results of this review will feed into that work.
“ASIC is already working with the institutions to improve compliance and advice quality through action such as:
- improvements to monitoring and supervision processes for financial advisers; and
- improvements to adviser recruitment processes and checks.
- ASIC will continue to ban advisers with serious compliance failings.
“While this review focused on five major financial services firms, the lessons should be considered by all vertically integrated firms in the financial services sector,” said Mr Kell.
These findings emphasise more than ever the importance of comparing a range of products before making a choice over which is the most competitive option for your own financial needs. Resources such as comparison websites and comparison tools are one way consumers can empower themselves.