Shadow shopper must be genuine benchmarking study: FPA

FPA chief executive Jo-Anne Bloch said she hoped ASIC would “take care to ensure the exercise is a genuine benchmarking exercise that demonstrates how advice is delivered in Australia and areas for improvement”.

She added that the announcement of the pending exercise yesterday by ASIC deputy chairman Jeremy Cooper was “nothing new”.

“The findings of the Joint Parliamentary Inquiry into Superannuation in 2007 and 2008 suggested that ASIC conduct a shadow shop review, and ASIC agreed to it."

Bloch said the FPA’s concerns are not so much that there is going to be a shadow shopper investigation, but the fact that (previous) outcomes are always more emotional and sometimes misleading than we would like.

“We want a genuine benchmarking study that is useful to enable all of us in the industry to understand how advice is delivered in Australia and what areas we can improve on.”

Bloch also responded to comments from Industry Super Network (ISN) executive manager David Whiteley, who has welcomed the exercise as “timely in view of recent financial scandals”.

Whiteley called on ASIC to not only test whether financial advisers are meeting their current obligations but also whether the advice is in the best interests of their clients.

“The shadow shop must test the nexus between commission sales and poor financial advice,” Whiteley said.

Bloch responded that FPA members are required to put their clients first, which we believe is a strong statement of fiduciary responsibility, but we recognise that membership of the FPA is voluntary.

“Secondly, it should be noted that ISN is once again taking the opportunity to promote their business model and their product while scaring consumers and undermining confidence in financial advice."