Will bank staff be mistaken for advisers?

ABA/advisers/banks/staff/personal-advice/banking/the-Senate-Economics-Legislation-committee/design-and-distribution-obligations/product-intervention-powers/DDOs/financial-products/

23 October 2018
| By Mike |
image
image
expand image

Bank employees may be misconstrued by customers has giving personal advice unless there is greater clarity injected into the Government’s Design and Distribution laws, according to the Australian Banking Association (ABA).

The ABA has used a submission to the Senate Economics Legislation Committee’s review of the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018 to restate that real risks exist of bank customers becoming confused by the design and distribution obligations (DDOs).

“To comply with the DDO and determine whether a consumer falls within a target market, distributors will need to take steps to understand the consumer’s circumstances,” it said. “In taking these steps, there is a risk that consumers will come to believe that (or, at least, be confused as to whether) the supply of the financial product has been made as a result of the consideration of their individual circumstances and is thus akin to receiving personal advice.”

It said customers might believe that because they had been supplied the financial product, a conclusion had been reached that it was appropriate for their unique circumstances, rather than because their circumstances matched those of the target market.

“This requires consumers to be able to discern between supplies of financial product on the basis of the DDO and supplies that are based on personal advice,” the submission said.

The submission also warned that to clarify the situation, staff would likely need to ask questions of customers about their personal circumstances, financial situation or needs and therefore risk being reach of other elements of the law.

“However, the client may also be left believing that their personal circumstances have been taken account of for purposes other than simply determining whether they fit the relevant target market determination,” it said.

 

 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months 1 week ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks 1 day ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

2 weeks ago

One licensee has lost 27 advisers in the past week, now sitting at zero, according to the latest Wealth Data figures....

3 weeks 1 day ago

TOP PERFORMING FUNDS