‘Extend anti-hawking laws to advisers’ cold calls’: AIST
The Australian Institute of Superannuation Trustees (AIST) has advocated for banning unsolicited calls to consumers from advisers and financial planning businesses in an extension of existing anti-hawking legislation.
Though superannuation products were subject to the laws, per recommendations by the Hayne Royal Commission, it did not extend to financial services like advice, AIST chief executive Eva Scheerlinck argued, adding that a number of firms used intermediaries to solicit business through these means.
She outlined cases where super fund members would receive cold calls from an intermediary generating business for a financial planner, cautioning them about their current “high risk” fund. The member would then receive documents over email, like a completed application for a retail fund and an invoice for advice that was not provided, to be signed.
It resulted in consumers rolling over from high-performing, low fee profit-to-member funds to poorer-performing retail funds, shelling out up to $6,000 in adviser fees in the process.
“A number of these cases have been reported to [the Australian Securities and Investments Commission] and while ASIC may be able to pursue the advisers for poor advice, this is a time-consuming ‘whack a mole’ approach that does not address the systemic risk to customers,” Scheerlinck elaborated.
In a pre-Budget submission to Government, she noted “the same imbalance of power exists in the unsolicited sale of financial services as in the unsolicited sale of financial products”.
“We all know the feeling of receiving an unsolicited call from a number we don’t recognise and speaking to somebody we don’t know who is trying to sell us something we don’t need or even want,” she stated.
“When they’re selling financial services like super advice to skirt around a gap in the law and trying to bamboozle consumers with half-truths into signing up for a costly service that is not in their financial interests, it should be outlawed.”
AUTHOR
Rhea Nath
Recommended for you
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
Morningstar has made two business development appointments to drive the growth strategy of its financial advice software, AdviserLogic.
FUM - follow the money. "It resulted in consumers rolling over from high-performing, low fee profit-to-member funds to poorer-performing retail funds, shelling out up to $6,000 in adviser fees in the process."
Is why we have all the red tape - and product providers don't? Seems these low fee profit-to-member funds have benefited from the elimination of the Banks/AMP and are looking set to benefit from Michelle Levy's recommendations.