Ombudsman gets into bank advisers
FINANCIAL advisers working for banks have been criticised by the Banking Ombudsman for "overselling" their funds.
The ombudsman says there is an increasing number of complaints being made about bank advisers, and it is cause for concern.
The rising number of complaints comes against a background of banks capturing a majority of funds flow into the industry and a downturn in markets.
According to figures from research house Morningstar, banks have been top fund gathers in the past year. Two of them, WestpacTrust and ASB Bank, have been hugely successful at attracting money into their mortgage funds.
In the 12 months to September 31 more than $351 million, representing 40 per cent of total retail funds was invested in their mortgage funds.
Banking Ombudsman senior investigator Susan Taylor says bank advisers have been overselling funds on past performance. However, with negative returns in the past 18 months, customers have felt misled.
ASB Bank's chief manager managed funds, Roger Perry, says he is not surprised the Banking Ombudsman is getting more complaints about bank-managed fund products.
He expects customers will start questioning their investments after 18 months of negative returns.
While he acknowledges ASB does get some complaints, and the number has been increasing, Perry says the advice process has been improving over the years and it is now very robust.
Financial Planners and Insurance Advisers Association chief executive, Phillip Matthews, says one of the criticisms in the ombudsman's report is over banks' prospecting process.
Matthews says advisers need to be careful about the way they prospect, or find, new clients.
"Advisers should ensure they are as ethical in their method of prospecting as they are in the way the way they look after a prospect once they become a client," he says.
Recommended for you
Financial Services Minister, Stephen Jones, has assured the cost and time to enter the financial advice profession will soon be halved, as shadow treasurer Angus Taylor pledges to reach 30,000 advisers.
The positive results of the latest financial adviser exam have helped the advice profession reach 15,600 yet again, according to Wealth Data analysis.
Financial advice firms have told Adviser Ratings they are planning to increase their compliance spend by almost a third, including on enhancements to their cyber security which ASIC has identified as an enforcement priority.
The digital advice platform is officially launching into the financial advice sector, offering up its services to practices as a means of engaging with the next generation of clients.
