The Australian Securities and Investments Commission's (ASIC) platforms review has drawn support from a range of stakeholders for proposing providing additional consumer protection via capital adequacy and for placing the spotlight on other gatekeepers in the financial advice chain.
ASIC last week announced Consultation Paper 176, which will examine the regulatory approach to investor-directed portfolio services, and proposes "additional requirements for platform operators to enhance investor rights associated with investments made through platforms".
Chief executive of independent platform provider OneVue, Connie McKeage, was highly supportive of the paper and said it was an area that required further attention.
One of the greatest areas of conflict is between platform and manufacturer, she said. Some of the controversies that have afflicted the industry have been levelled at the financial advice part of the value chain – but the manufacturing component is also to blame, McKeage said.
"We're absolutely supportive in understanding why certain products get on a platform menu and others don't," she said.
"When platforms have manufacturers underneath or product providers, we would be looking for a consistent, level playing field for all manufacturers, with a common methodology by which someone can arrive at an outcome. Very much like a manufacturer needs to demonstrate their investment philosophy and process, I think the platforms should have to justify, as we do, the decisions they come by," McKeage said.
ASIC said the proposals aimed to strengthen operating requirements for platform operators, ensuring they have adequate resources to conduct their financial services businesses.
Managing director of independent service provider Paragem Ian Knox said the consultation seemed to be an across-the-board effort to ensure appropriate capital backing was behind the industry, which would inevitably favour large institutions and publicly listed entities.
Knox predicted that major changes would not be required for well-resourced institutions. He said the emerging challenge would be for third party entities and industry bodies like the Association of Independently Owned Financial Planners (AIOFP), which might be forced into providing capital adequacy requirements in their own products. The AIOFP last year launched a private label eWrap platform via its member-owned administration business, Personal Choice Management.
Financial Planning Association general manager policy and government Dante De Gori also supported a review. He said that with all the focus on planners through Future of Financial Advice reforms, it was important to look at past failures not only from an advice point of view but from a product and fraud perspective.
He added it would be interesting to see what implications the new regulatory guide had for financial planners and the financial advice process, noting the ASIC guidance indicated consumers would need to be equally protected whether they invested on a platform independently or through an adviser.
MLC investment platforms executive general manager Michael Clancy said MLC and NAB Wealth were supportive of efforts to further improve investor confidence and looked forward to reviewing the proposals in greater detail and working with ASIC through the consultation period.
An IOOF spokesperson said IOOF welcomed in principle the ideas that had been raised but questioned the timing, saying the industry might not be able to respond by the dates outlined. The April 20 cut-off is less than six weeks after the initial announcement.
AMP and Colonial First State both indicated it was too early to provide a full response. Macquarie Bank said it would not be able to provide a response by Money Management's deadline. ANZ and BT did not respond to requests for comment by Money Management's deadline.
