AIOFP questions ASIC on sad MIS/PDS past
The Australian Securities and Investments Commission (ASIC) has made clear that key issues around the Compensation Scheme of Last Resort (CSLR) and the vertical integration are matters for the Government of the day, not the regulator.
Answering questions directed to it by the Association of Independently Owned Financial Professionals (AIOFP), ASIC’s formal response has made clear both its approach and the limits of influence on Government policy.
However, the AIOFP has sought further responses from ASIC based on feedback from its members around the operation of Managed Investments Schemes (MIS) and Product Disclosure Statements (PDSs) noting that the current regime has been “an unmitigated disaster”.
The e-mail to ASIC originated by AIOFP executive director, Peter Johnston said “it is time ASIC acknowledged that if Advisers do not act in the best interests of their clients their business will fail”.
“They want the best outcome for their clients but many Advisers have been caught with Product failure over the decades caused by the incompetence of other stakeholders i.e. Trustees, Manufacturers, Custodians, Auditors, Research Houses, Regulators,” it said.
“The failure of Products is the greatest source of Consumer losses over this period,” the e-mail said pointing to the AIOFP’s research detailing post 2006 losses>
“…we expect the post 1991 losses will exceed $60 billion in aggregate, but very little has been done about it, it has been too easy for ASIC to attack the ‘low hanging fruit’ Advisers and not hold all other stakeholders to account,” it said.
The e-mail then asked: “surely the ongoing failure of the MIS/PDS process demands immediate attention to prevent products failing?” before suggesting that it might be tie to align both consumer and Australian Public Service interests by imposing a Best Interests duty on the conduct of public servants.
It also asked whether ASIC is going to change its approach to consumer protection and product failures arguing that consumers do not understand that AQSIC do not assess new product disclosure statement products before market release.
“They naturally think ASIC has approved the product,” it said.
“When a Product fails ASIC immediately attacks the Advisers involved while the other parties who manufacture, manage, administer the product escape accountability,” the e-mail said.
“We are pleased that ASIC are now investigating the role of Administrators, Trustees, Custodians, Auditors and Research Houses play in the failure of Product, but talk is ‘cheap’ what actions are ASIC proposing to put in place?”
The e-mail said that advisers are aware of the difficult role ASIC play but believed that advisers need to “have a more proactive role with policy and regulatory input to benefit consumers and the profession in general.
“We believe the existing intense ‘them and us’ attitude commenced in the post 1991/2 period when the flawed MIS regime created the need for a ‘scape goat’ to blame for Product Failure,” the e-mail said.
“…it is time to bury that lamentable period from the past. We are not holding the current ASIC management responsible for this malaise, it has been developing over the long term.”
ASIC guide and provide advice to the government on the legislation. They can’t wash their hands and claim it’s not their issue. We all know they are activists who have previously, and may currently, provide money to Choice for their submissions etc.
ASIC prove yet again how useless they are and have no intention to change the Kill Advisers for everything attitude and actions.
Advisers need to make a stand.
Refuse CSLR levies
Refuse ASIC levies
Let ASIC, CSLR and Govt try to shut the whole Real Advice industry down in one go. Time to push back on ASIC & Govt total stupidity, total adviser persecution and make an ultimatum.
Interestingly, my wife was asking me why advisers don’t boycott paying these ‘fees’ this very weekend. I told her a total pushback had been called for many times before…and never gets anywhere.
I really don’t know why… there is a best interest duty and all these costs add to clients advice fees yet provide no value to our clients. Why can’t a ‘class action’ be put together and get these unethical fees tossed out as clients of great advisers who did no wrong are paying for something a bad adviser did. Who chose the adviser they ended up with!!
ASIC is chock of full lawyers who failed to get a job with a decent law firm in a major city, so had to settle on the public service, with an average salary in cold and miserable Canberra.
They look at financial advisers, who earn far more than them, and are respected by their happy clients. Despite all of the frustrating, needless red-tape ASIC adds to our workload, we have an amazing job, with client relationships and satisfaction levels which are the envy of other professions.
If you look at ASIC through this lens, you can understand why they have such a deep cultural problem. They are full of envy and don’t have a clue about client relationships.
Our profession will never move forward with ASIC controlling us. We need a board of experienced, practising professionals, in the same way other professions are regulated.
I have never seen an industry where the other professionals pay for the inappropriate behavior, advice or actions of others within their profession.
Do other medical specialists stump up for monies owed when a patient sues a fellow specialist and the PI cover does not cover the entire payout?
Why would you enter our profession?
You wouldn’t unless you were mad.
Unacceptable state of affairs.
As we suspected ASIC are again trying to attack and charge advisers for all the issues that are clearly product issues we have little control over.
CSLR is theft from good hardworking advisers. This sort of theft simply does not occur in any other industry.
Every question that involves product particularly vertically aligned products like the industry fund sector gets blocked, deflected or defended. They are simply again scapegoating advisers for crimes they did not commit, and ignoring the major conflicts of interest we have always had in the conflicted product, vertically aligned Industry Fund sector. They are simply too scared to be honest with the public about this issue because the incumbent government are also heavily aligned with these corrupted union based industry funds and this is the reason we need an unbiased honest regulator and not one like ASIC that does the unions and Industry Funds bidding for it.
Where’s the impartial regular that actually represents advisers and unconflicted advice, because it certainly isn’t ASIC!!
Little control over? if you were recommending this product you are part of the problem
AIOFP have had their fingerprints on numerous MIS failures, maybe look into their own backyard first
Good article Peter.