Investment and Financial Services Association (IFSA) chief executive Richard Gilbert has slammed comments made by deputy governor of the Reserve Bank of Australia (RBA) Ric Battellino on sales commissions and conflicts of interest.
"The question remains as to whether full disclosure is enough to deal with the potential conflicts of interest associated with commission-based fees, or whether there is merit in the industry moving further in the direction of offering advice on a fee-for-service basis," Battellino told an audience at the 20th Australasian Finance and Banking Conference on Wednesday.
"I am surprised by his statements. I thought the industry had two regulators not three. We don't expect our industry to set home loan rates. Likewise the RBA should stick to its core objectives" Gilbert told Investordaily.
He said it was ASIC's job to address conflicts of interests in financial services not the RBA.
"We already have a twin peaks regulatory system in financial services. To have three peaks would be very worrying. We need to cut red tape not create more of it," he said.
The association representing industry superannuation funds, however, supported the comments made by Battellino.
"These comments from the Reserve Bank join a growing and harmonious chorus of the business community highlighting the conflicts of interest inherent in the sales commission model preferred by major financial institutions and financial advisers," Industry Super Network executive manager David Whiteley said.
