ASIC has indicated it will conduct further shadow shopper research surveys on Australia’s financial planning sector as well as consult on the possible development of a service that evaluates advisers on behalf of clients as part of a move to assist the industry in improving the quality of advice.
Late yesterday, the corporate regulator released the full findings of its shadow shopping survey on retirement advice.
As was revealed in January by ASIC commissioner Peter Kell, the survey found only 3 per cent (two examples) of advice plans provided were graded as good.
The report, “279 Shadow shopping study of financial advice”, also found over a third or 39 per cent of the advice examples were poor.
The majority of advice examples reviewed, or 58 per cent, were adequate, the report said.
In the report, ASIC said there were a number of areas where the corporate regulator, Australia’s financial advisory sector and consumer groups could work together to improve the quality of advice.
“We will consider carrying out further shadow shopping research on financial advice in accordance with recommendation 2 of the PJC (Parliamentary Joint Committee) Inquiry into Financial Products and Services in Australia, released in November 2009,” the report said.
“The possible focus of future shadow shopping research would be to benchmark the quality of financial advice under a new regulatory framework, if a duty to act in the clients’ best interest is implemented in accordance with proposed legislative changes.”
The regulator was also interested in consulting with financial advice groups, compliance organisations, consumer groups and research agencies over the possibility of establishing an independent service that evaluated advisers and advice groups for clients, it said.
“While our role does not include providing an advice evaluation service for consumers, a key finding from this research is that it is difficult for consumers to objectively judge the financial advice they receive, and they do not know where or how to shop around to find the best advisers,” it said.
“We will issue an example of scaled financial advice that covers retirement topics in ASIC’s forthcoming regulatory guide on scaled advice.”
ASIC would also work with financial advice industry associations to provide workshops covering the more detailed findings of the report so that the concept of good-quality advice could be further refined and implemented, it said.
“We will also work with industry associations to ensure that quality advice frameworks are incorporated into professional development programs,” it said.
ASIC also planned to review and reissue its “Getting advice” booklet, the report said.
