Investors question adviser integrity
A new survey published by the corporate watchdog reveals investors and consumers are largely sceptical when it comes to the integrity of financial advisers, while some of the other industry gatekeepers fared well.
The Australian Securities and Investments Commission (ASIC) had partnered with Susan Bell Research to conduct a survey of both industry participants and investors about the regulator's performance and their perceptions about the environment in which it operates.
Respondents were asked whether gatekeepers such as product providers (banks), financial advisers and fund managers had integrity, with financial advisers faring the worst.
Only a quarter of all respondents thought financial advisers had integrity, with ASIC highlighting consumers were much more sceptical than those who work in the financial services industry.
On the other hand, product providers and institutions, and fund managers received a more positive result.
However, when asked whether the financial services manages conflicts of interests effectively, only 20 per cent answered it was.
Furthermore, investors and consumers who participated in the survey wanted to see ASIC focus on imposing sanctions, with many wanting and expecting to see people jailed.
"[ASIC is] there to monitor the companies — and for the companies to know that they are there watching them…and if they do step out of line then ASIC can come down on them with a big stick, which will then make investors feel confident in investing in the market," one consumer wrote.
The regulator also noted many investors and consumers wanted and expected to see people jailed.
The survey found stakeholders were generally positive about ASIC's performance, especially with regards to market supervision. However, some of the limitations identified by survey respondents were the regulator's inability to act quickly to investigate breaches of the law, clearly communicating what it is doing and reducing red tape.
ASIC Chairman Greg Medcraft said the regulator will address those concerns.
Medcraft added ASIC was committed to an efficient and transparent enforcement approach, pointing to a 2012 report outlining its approach to and use of, enforcement powers.
"We will communicate more about the legal procedures involved in investigations, the complexity of some matters and the time investigations take," Medcraft said.
Stakeholders also thought the watchdog was not sufficiently resourced to do its job.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
