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Australians are receiving poor financial advice due to conflicts of interest and poor training, according to ASIC.
The regulator’s submission to the Financial System Inquiry said it had long been concerned about the problem – and that it wasn’t limited to a few bad apples or a few bad firms.
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“Instead, they reflected 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,” it said.
ASIC called for “significant improvement” in the competence and training of financial professionals.
“ASIC considers that an objective process is required to determine whether advisers have met a minimum standard of competency, and the most transparent and effective way to achieve this is through a national examination model,” the submission said.
However, the regulator also said the credit reforms of the past five years had gone a long way to cleaning up the financial services industry.
“The credit reforms have imposed minimum competency and honesty standards on credit providers, mortgage brokers and other industry participants,” the submission said.
“These standards apply consistently across all Australian jurisdictions and include a number of areas not adequately covered by previous state-based and territory-based regulation, such as mortgage brokers and loans to invest in real property.”
