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ASIC targets advisers on under-performing choice products

Mike Taylor29 August 2023
Hand holds dart over target board

Financial advisers and their licensees are going to be held to account in instances where they have recommended under-performing choice superannuation products, according to the Australian Securities and Investments Commission (ASIC).

At the same time, ASIC has expressly mentioned the provision of financial advice around the establishment of self-managed superannuation funds (SMSFs) as a review area over the next 12 months.

The regulator’s attention to SMSF establishment advice compliance warranted its own headline in the ASIC Corporate plan covering the next four years with the promise that it would be a more than one year operation.

At the same time, ASIC said its focus on financial advisers would involve continuing to facilitate the registration of relevant providers and continuing to “engage with licensees and advisers to ensure they understand and comply with their new registration obligations.

It said it would also be completing a review of superannuation trustees’ distribution practices in relation to choice superannuation products “and the role of financial advisers and their licensees in the distribution of underperforming choice products.

Where life insurance is concerned, ASIC said it would be reviewing the direct sale of life insurance via a review focusing on low-value products where it would take action, including enforcement action, to address harmful practices.

The regulator said it would also continue to assess life insurers’ compliance with their obligations in relation to setting premiums with a focus on premium increase practices, disclosure and marketing and sustainable product design.

“We will take action against misconduct and we will communicate our findings to drive improved outcomes for consumers around product design,” it said.

Dealing with superannuation, ASIC said it would be reviewing industry practices and compliance with laws in relation to trustee administration and contact centres.

“We will take action, including enforcement action, against conduct that is misleading or otherwise results in unfair treatment of consumers,” it said.

“We will complete our review of superannuation trustees’ distribution practices in relation to choice superannuation products and the role of financial advisers and their licensees in the distribution of underperforming choice products.”

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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Scott
5 months ago

It will be interesting to see if ASIC do anything about the unlicensed accountants establishing SMSF’s. My fees are at least double the accountants doing it on an “execution only” basis so not many SMSF’s would be established through licensed advisers in my view. Personally I’d be amazed if ASIC look in the correct area based on their pitiful results over the past decade.

Another Mad Planner
5 months ago
Reply to  Scott

Exactly, but when a client needs advice accountants only work on instructions only. How many clients know how much and when to set up a pension etc. The client looks to them as the adviser but get nothing, if an adviser is involved the client does not want to pay as the client sees that they already pay the accountant.

To top it off, when a client only has a term deposit and a small investment account inside the SMSF and asks a FP on retirement advice the accountant blocks when you try to wind up the fund as it is costing the client more then $2.5k a year than a regular platform. Just protecting the accountants income stream.

But anyway, us FP’s are the bad guys hurting Joe Blow public.

ASIC are FKN useless!

Steve
5 months ago

Over what period & on what basis?

Steve
5 months ago

It will be a good line to use to get rid of pesky BDMs.

Realist
5 months ago

HERE’S AN IDEA – instead of flogging the same dead horse ie advisers, why not do something constructive for Australian consumers and go after fuel companies and the fuel price gouging currently taking place? OH, that’s right cost of advice has only skyrocketed since public servants got involved in the advice process – better stay away from fuel!

Bureaucrats Off their heads again
5 months ago

Can’t wait for ASIC & APRA to compare 94% Growth Assets so called Balanced Funds against a more realistic 70% Growth & 30% Defensive Fund.
More bureaucratic bungling comparing Apples v Watermelons via Canberra bubble peanuts.

one foot out the doora
5 months ago

This will be interesting!

Frank
5 months ago

Where’s the consideration to volatility and limiting drawdown for those in pension phase?

Davey NoFurries
5 months ago

“ASIC targets advisers”, “ASIC Levy to jump”, “Heads on sticks” – is it any wonder the advice community and advisers are leaving in droves.

RFH
5 months ago

ASIC has expressly mentioned the provision of financial advice around the establishment of self-managed superannuation funds (SMSFs) as a review area over the next 12 months.”

Well, you know that if they are not going to look into unlicensed accountants setting up SMSFs, then you know ASIC are corrupt and out to get Advisers.

fed-up
5 months ago

What skillset does ASIC have to make these judgements? I believe they are nobody public servants trying to find relevance.

Has Shoes
5 months ago
Reply to  fed-up

They are lawyers and therefor they are always right! A lawyer always wins their case…the other lawyer comes second…

Col Carpenter from Compliance
5 months ago

Without any doubt another obvious ploy by Govt., Treasury and ASIC to isolate the ISF’s and smash more advisers out of the Industry. Care to discuss this and the ‘good advice’ proposal Michelle Levy?

bemused
5 months ago

After culling us the next strategy is to have us all working for Hesta in a call centre. Just for some career certainty, it would be good if someone could ask ASIC just when they’d like us to be extinguished by. Is it a 5 year plan or 3 ?

Billions of dollars are lost in scams each year and they put out this $@^#… All I need to do is flog a driver’s license, I can open a Bank account online and ASIC will let me set up a company in 5 minutes. A few minutes later on Facebook & Tik Tok you can get 5.85% in my Reserve Bank of Australia Guaranteed “Macquabie” Bank income notes (terms and conditions apply of course). The whole thing will take ASIC at least 5 plus years after Australians lose millions to close it down and yet… nah let’s go after those nasty Financial Advisers.

Last edited 5 months ago by bemused