Data used to help ASIC identify poor advice

The corporate watchdog has been collecting data the advice industry has provided since September 2016 to help identify advisers who are more likely to give advice that is not in the best interest of their clients.

Keynote speaker at Money Management’s Annual Risk Policy and Awards Breakfast this morning, the Australian Securities and Investments Commission (ASIC) senior executive leader of financial advisers, Joanna Bird, said the data from life insurance companies gave the regulator a sense of how many policies were lapsing.

“So, we combined that with a number of risk factors that identify people that are more likely to be at risk of providing poor advice so we can target our limited resources in the right place,” she said.

“It’s all a matter of getting together risk indicators and then we have to look at the advice. We can’t tell people are giving good or bad advice based on risk indicators, we look at the advice.”

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Bird noted that there had been considerable misunderstanding of the data exercise and said ASIC only had resources to conduct surveillance in relation to 10 advisers who were brought to their attention through the data.

She stressed that this figure was not a measure of misconduct in the industry, but a measure of ASIC’s resources.

“So now we’ve completed surveillance on these advisers to test whether their advice complied with the law and where we found advice that didn’t comply and where it is serious enough for banning action, that is what we’re doing now,” she said.

“It’s not an easy process to ban advisers and it should be hard. It should be hard to take the right to take away someone’s ability to work in their chosen professions.

“We may also consider taking action relating to some licensees as a result of their failure to monitor adviser representatives adequately. We’ve recently received our second set of data and we’ll start the whole process again to look at 10 advisers as we don’t have the capacity to look at more at the moment.”

Bird said ASIC banned 46 advisers last year and 13 of those were related to life insurance advice.