ASIC Is Targeting The 'Six Largest Financial Advice Institutions'

Picture: Crown/UK Ministry Of Defense

ASIC released its 2014/15 Strategic Outlook yesterday and chairman Greg Medcraft led off with a pointed message of ASIC’s goals in the year ahead saying that:

Making sure Australians have trust and confidence in the financial system is at the heart of everything we do.

Markets cannot achieve their fundamental purpose in funding the real economy if investors, consumers and issuers do not have trust and confidence in them.

He said that this shaped the focus of this year’s review and with that in mind, ASIC has a particular focus on “Gatekeeper conduct in financial services”.

In the outlook ASIC said that weak compliance systems, poor cultures, unsustainable business models and conflicted distribution “may result in poor advice, mis-selling and investor loss, especially in managed investments”.

As a result ASIC is going to:

Conduct proactive risk-based surveillance, concentrating on compliance in large financial institutions, and advice and dealing activities in:

  • Financial advice firms: target the six largest financial advice institutions to test how they comply with high-risk areas of the law
  • Responsible entities operating managed investment schemes: continue to identify ‘red flags’ and focus on high-risk entities

The reference to “the six largest” advice institutions would suggest that ASIC is targeting the vertically integrated financial product creation and distribution channels established by the four major banks, AMP and Macquarie Bank.

It will continue the pressure on the banks and their model at a time when the Murray Inquiry is due to release its final report next month.

You can read the full ASIC Strategic Outlook here.

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