ASIC approach queried
A survey of the financial services industry conducted by Money Management has revealed 50.3 per cent of financial advisers believe the Australian Securities and Investments Commission’s (ASIC) enforcement actions regarding choice of fund are over the top.
ASIC has made its regulatory presence felt in the superannuation choice of fund environment with exercises such as super switching surveillance and a current shadow shopper campaign.
The results also showed 41.7 per cent of advisers thought ASIC’s approach was appropriate, while only 7.9 per cent felt the organisation’s attitude towards super choice regulation was not hard enough.
One respondent indicated the regulator’s actions might actually lead to a situation where only wealthy clients were looked after. This planner warned: “The incredible amount of extra time having to be taken by advisers to determine the information on the previous fund[s], often unavailable, means that the good and painstaking advisers will not be willing to spend this time on small and even medium sized clients for whom they will not be adequately remunerated, given the ASIC focus on procedural liability.”
It was also suggested ASIC’s crackdown was a waste of time with the comment “you cannot legislate against the bad, immoral or uncaring adviser”.
“The whole thing is getting a lot better. It’s getting to the point where people do have faith in financial advice and that’s good. We still have a lot of things to clean up in the industry no doubt to be called totally professional, but as long as we keep aiming for the betterment of the industry with clients, that’s great.”
Some sentiment subscribed to the view that ASIC’s actions were too soft centred on the continued presence of commission-based advice. One adviser said: “Until commission-based advice goes, the industry will not move forward.”
Fund managers on the whole were more accepting of the regulatory body’s methods with 58.8 per cent of those who took part in the survey thinking the enforcement approach to date had been appropriate. The study also revealed 23.5 per cent of fund managers thought ASIC’s actions were too tough, with 17.6 per cent feeling they were not tough enough.
The Money Management survey was conducted in late 2005 and received responses from around 170 financial services industry participants, with the majority being fund managers and financial advisers.
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