ASIC admits targeting big dealer groups
The Australian Securities and Investments Commission (ASIC) has admitted that it targeted some of the biggest financial planning entities such as AMP, Commonwealth Financial Planning and Professional Investment Services in its shadow shopping exercises because it believed it would make the most impact.
The revelation that the regulator was focused on such big players came in evidence to Senate Economics Legislation committee at which ASIC senior executive leader, Greg Kirk claimed the regulator's 2006 shadow shopping exercise had reinforced that poor quality advice remained a problem.
"ASIC was trying to work out how to address such a large scale problem and thought one way to make a big change quickly was to focus on some of the biggest entities in the marketplace," he said. "We ended up focusing on AMP, CFPL and PIS—three of the biggest licensees in terms of the number of representatives they had out there giving advice".
"All of those exercises found problems, all led to enforceable undertakings (EUs) and all led to significant changes. The ramifications of a lot of that are still going on," Kirk said.
Elsewhere in his evidence to the Senate Committee, Kirk said he could not give a 100 per cent assurance that all of the issues had been addressed within Commonwealth Financial Planning.
However he suggested that the planning group had probably been scrutinized and tested more than any other licensee in the industry.
"Those processes and systems have been looked at and independently tested probably more than those of any other licensee in the industry and they have come through that testing process," Kirk said. "They have been independently found to be adequate and appropriate."
However he added, "That does not mean there are going to be people who get poor advice from time to time. That is why people can come and complain to ASIC and ASIC would investigate. That is why ASIC does surveillance and that is why the Financial Ombudsman Service is there so that people can get redress".
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