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ASIC uncovers more institutional negligence

John Hewison
Founder and Director
20 Apr 2015

Australian Securities and Investment Commission (ASIC)’s recent investigation into service provision of financial advice behaviour of six major financial institutions has uncovered further negligent practices, including client charges for services which were never provided. 

These practices are consistent with the so-called “service fees and commissions” that are supposed to entitle clients to ongoing reviews of their financial affairs and portfolios. So far, ANZ Bank has announced a $30 million refund project as a result of the investigation, however they certainly will not be the last financial institution to be exposed.

Neale Younger, ANZ General Manager for Advice, told consumer group Choice that the annual review, for which clients paid an approximate upfront fee of $3,500, was “not essential” to the ongoing management of client portfolios. 

In a statement, Mr Younger said “At a macro level, we don’t believe there has been any detriment, but I can’t account for every individual.

“The bank (ANZ) has chosen to embark on the major refund project because it did not meet its contractual documentation requirements, not because of inappropriate advice.”

This attitude is indicative of the total disconnect between institutional management and their fiduciary duty to clients. It can also have serious financial consequences for the client if they have effectively paid for a service they didn’t receive. 

A regular review of an individual client’s circumstances, a restructure of their strategy where necessary and consistent re-balancing of their investment portfolio is essential to successful financial management in a technical sense. Just as important is the education, emotional and personal support that clients need to effectively manage the financial aspects of their lives.  

The entire concept of charging for service that is never delivered is “a disease” that pervades the financial services industry. It is perpetuated by existing legislation that that allows the grandfathering of existing trailing commissions.

As a fee-based independent financial advice and wealth management firm, Hewison Private Wealth is absolutely committed to the ongoing management of our clients’ affairs. We charge our clients for services rendered and are 100 per cent accountable for providing value for money. In our view, this is the way forward for the financial planning profession to improve its reputation with Australian consumers and achieve the professional recognition it deserves.

Only the Federal Government can change the rules to enable the profession to acheive this and prevent future negligent practices.

If you would like to see how Hewison Private Wealth is different and how we can help you achieve your financial objectives, please contact us.  

The information provided above is general information only and individuals should seek specialised advice from a qualified financial adviser. Please contact Hewison Private Wealth for more information. 

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.