ASIC to weigh in on financial advice practices
Institutions offering financial advice to Australians will be the subject of an investigation by the Australian Securities & Investments Commission (ASIC). The independent government body that acts to regulate the corporate sector is stepping in to offer specific guidelines for the financial industry to follow after some customers have been found to have been given bad advice.
Banks and financial advice providers have been conducting their own reviews of their services in recent years, usually when widespread issues are uncovered in terms of the value of the advice being offered to customers. Customers that are found to have been given bad advice or paid too much for the services are identified and remunerated accordingly.
ASIC is stepping in to ensure that large and small advisers are conducting these proactive reviews in an efficient, fair and honest way.
At the moment there are three reviews underway for CBA, Macquarie Group and NAB. These were implemented following the discovery that some rogue advisors were not acting in their customer’s best interests.
Recently Westpac confirmed that they will commence a review and remediation process after ASIC lifted the lid on the way the bank was approving credit limit increases.
ASIC found that Westpac had failed to ensure that card holders were currently employed before approving credit card limit increases. They will start investigating customers who had experienced financial difficulty as a result of the limit being increased, and may give the customer a refund if it is deemed appropriate.
While the procedures will not be compulsory, it will offer the industry some best practice procedures to follow, instead of the ad hoc system which is normally designed internally.
The guidelines suggest the positive step of actively seeking out customers that may have been affected, rather than waiting to be contacted by unhappy clients. ASIC suggests that the industry look as far back in their records as possible, not just from the mandatory retention period.
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