Law firm Maurice Blackburn has urged Australian consumers to avoid taking advice from financial planners employed by a bank, with principal John Berrill saying major banking institutions wanted to “keep more of their money in-house”.
Berrill, who lead a class action against Commonwealth Financial Planning, said the best way to avoid being a victim of poor financial advice was to avoid bank-aligned planners altogether.
“[Banks] want to keep more of their customers’ money in-house by selling them their own insurance, managed funds, and investment loans,” Berrill said.
“An adviser working for a bank is likely to, under considerable explicit or implicit pressure, sell the bank’s own products, which may not be the most appropriate or cheapest.”
Berrill added a sensible client would get their advice from an adviser “not connected to a bank, or indeed to any of the institutions with whom their money would be invested”.
An adviser recommending an in-house investment should include in the statement of advice information about alternatives and explain why the investment is better, Berrill said.
A couple of major banks have recently admitted to the Parliamentary Joint Committee (PJC) for Financial Services and Corporations that their planners were still subject to revenue targets, but that the best interests duty – introduced as part of the Future of Financial Advice (FOFA) reforms – would eliminate any conflicts.
When questioned by the PJC, the Australian Securities and Investments Commission agreed most conflicted remuneration was eliminated with the introduction of the FOFA reforms package, adding most institutions had robust systems in place to manage any conflicts of interest inherent in their business models.
This is despite the regulator recently releasing a report in which it expressed concerns about the number of some of the largest financial advice groups being owned by product issuers.
