Approved product lists under regulator scrutiny

Jeffrey Lucy

The Australian Securities and Investments Commission (ASIC) is still closely monitoring the use of financial planning dealer groups’ approved product lists to ensure they do not give rise to investment advice that is given without a reasonable basis.

Speaking at an Association of Superannuation Funds of Australia function, ASIC chair Jeffrey Lucy said the regulator did, however, acknowledge that approved product lists played an important role in the advice industry and perhaps were an inevitable component to the broader financial services landscape.

“Approved product lists may be a useful way for licensees to control the quality of the advice given by their employees and representatives. They provide a useful mechanism for ensuring advisers do not recommend products that have not been researched or do not meet key criteria,” he said.

But Lucy stressed it was imperative that financial planners and dealer groups used the lists in the correct manner.

“ASIC will not accept advertising of broad approved product lists when some superannuation funds are routinely given a ‘hold status’ so that advisers are prohibited from recommending those funds. This action is likely to mislead consumers,” he explained.

Lucy conceded financial planners did face difficulties when confronted with the situation of providing advice to a client who was an existing member of a superannuation fund that was not included on the approved product list, but said it was not an excuse for them to ignore their legal obligations.

“Advisers must be aware that their primary obligation is to comply with the law, including the switching obligations; obligations to licensees regarding approved product lists are secondary to these,” he said.