"ASIC has long been concerned about the quality of financial advice provided to consumers and about conflicts of interest in the financial advice industry," said the submission.
But those concerns are not merely confined to a few 'bad apples', or indeed a few bad firms, said the regulator.
"They [reflect] broad systemic problems within the financial advice industry, driven by ownership and remuneration conflicts of interest and low levels of competence, compounded by weaknesses in the regulatory system," said the submission.
A series of shadow shopping projects, most recently in 2011, have reinforced ASIC concerns, said the submission.
"ASIC surveillances have consistently found that many advisers are not adequately trained or competent to deliver financial advice to investors," said ASIC.
The regulator repeated its calls for a national exam for financial advisers, as well as mandated reference checking to weed out 'bad apples' and an "enhanced" register of authorised representatives.
The current authorised representative register should be expanded to cover employee advisers who provide financial advice about Tier 1 products, said ASIC.
It should also include a "comprehensive competence and employment history", said the submission.
"We expect that an enhanced public register would provide a real opportunity for investors and financial consumers to more effectively shop around when looking for a financial adviser," said ASIC.
The regulator also called for increased powers to ban a person from managing a financial services business or credit business.
"While ASIC has powers to cancel an AFS licence or credit licence, or ban a person from providing financial services or credit services, a missing element is a power to prevent a person from having a role in managing a financial services business or credit business," said the submission.
