Questions around lack of submissions to ASIC Senate inquiry
The appearance of the Australian Securities and Investments Commission (ASIC) before a Senate committee raises questions about whether the regulator has been fair in carrying out its task and also about the reluctance of the industry to make comments on that task.
Instreet managing director George Lucas said the issue of financial planning advice provided by Commonwealth Financial Planning in 2007 had prompted the question regarding whether ASIC had been fair in carrying out its task.
Lucas said the current Senate Economics References Committee inquiry into ASIC was the one of the few times it had been asked to account for its actions against a large financial advice provider.
However, Lucas said, many major advice providers were concerned about the confidentiality of submissions.
“They are concerned about whether their submission would remain confidential and have received legal advice that there was no upside to making a critical submission of the corporate regulator,” he said.
So far 45 submissions have been received with only 11 carrying names of personal investors. A further five were listed as confidential, one submission was from ASIC and the remainder listed as 'name withheld’. However an examination of these latter submissions shows that many are also from personal investors concerned with ASIC’s performance.
Lucas said the inquiry and ASIC’s appearance before it were notable because the regulator did not go to court regularly and had avoided head-to-head confrontation.
“ASIC has engaged predominantly in mediation but does not answer to an ombudsman, so appearing before a Senate committee is the closest it will get to giving account for its actions,” Lucas said.
Lucas said a side-effect of the Future of Financial Advice (FOFA) regime would be that ASIC would likely have to oversee a few larger advisory groups rather than many smaller groups.
“It is easy to understand why ASIC would prefer to work with larger organisations - they are easier to watch - but this approach stifles competition and innovation,” Lucas said.
“However the industry does have its swings, and at present is has swung to be big side of town because of FOFA and local and global regulations around banking and asset management.”
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
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.
