Home / Other

ASIC review highlights conflict of interest

Graham Hand
15 August 2013

An Australian Securities and Investments Commission (ASIC) review of the 21st to 50th biggest Australian Financial Services (AFS) licensees has found a majority of their income comes from product issuers, which may give rise to conflicts of interest.

ASIC Report 362 Review of financial advice industry practice: Phase 2 found that the management of conflicts of interest remains a "critical risk that requires ongoing attention from licensees".

Product concentration also represents a "significant risk" for licensees, according to the report.

"Any product failure will have a much greater impact on licensees whose product recommendations are concentrated into a small number of products, not only in relation to client losses but also in relation to the licensees’ income if a large proportion of their income is from commissions," said the report.

Report 362 is a follow-up of the September 2011 Report 251, which was based on the top 20 financial advice firms.

ASIC plans to visit other newly licensed financial advice businesses to discuss implementation of the Future of Financial Advice reforms.

ASIC, conflict of interest, financial advice, industry practice, regulation

Leave a Comment:

Comment is required Name is required Email is required

Are there lasting benefits from changes to capital raising regulations?

Temporary changes to capital raising regulations during the pandemic gave companies easier access to capital. The changes had a lasting impact on company behaviour though, to the benefit of retail investors.

Christine Brown
2 November 2022

We need to limit retail investor harm from CFDs

A Contract for Difference (CFD) is a highly-leveraged investment used for speculative and gambling activities by retail investors without the knowledge to take such risks. ASIC is struggling to control the product.

Prof. Kevin Davis
26 January 2022

Westpac case and the digital fix for SOA mess

Recent legal cases involving Westpac and BT put to rest any view that 'caveat emptor' (buyer beware) applies to 'no' and 'general' advice service models, even though those models do not attract a best interests duty.

Claire Wivell Plater
12 June 2019

Site Map

About Firstlinks

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.