ASIC's new rules

New ASIC regulations that make it simpler to switch between banks and limit the length of PDSs may mean more favourable outcomes for consumers.
 
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02.Improving transparency

ASIC took a hard look at deceptive advertising last year and says its actions resulted in more than 80 ad campaigns being changed or terminated. The use of terms such as “stress free” for complicated and risky investment products was one focus; another was discount home loan offers that lured customers in with come-ons such as “guaranteed finance” and “no application refused”. GE Money was obliged to change an online ad that was less than upfront about interest rates on loans. 

Conflicted reporting

ASIC also took steps to make sure the information you or your financial adviser are relying on to make investment decisions is not biased in favour of the companies offering the investments. In December last year, ASIC Commissioner Peter Kell warned that “if standards do not improve, ASIC will revisit the regulation of research report providers and consider whether specific law reform is needed”. In cases where product issuers pay researchers to rate their products, and the researchers stand to stay in their employer’s good graces by granting favourable ratings, it’s not hard to see where conflict of interest might be an issue. 

FoFA on the way

In late January this year, ASIC released a regulatory guide for financial advisers in advance of the Future of Financial Advice reforms start date of 1 July this year. For the many consumers who receive and pay for advice on an ongoing basis rather than under a fee-for-service model, the guide spells out some long-overdue obligations. From July, advisers must begin providing an annual fee disclosure statement that outlines the fees paid, the services provided and the services the client was entitled to receive – all requirements that CHOICE welcomes. 

Setting the standard 

In one notable gesture of leading by example, ASIC released a series of straightforward information sheets and reports last year that cover what happens when misconduct is brought to ASIC’s attention, when and why it may get involved, and how it exercises its enforcement powers. The agency directly addressed one longstanding point of confusion for consumers, making clear that it will only go after individual cases if it thinks the case is relevant to investors as a whole and does not generally aim to recover funds. 

ASIC also deserves credit for an impressive degree of plain-spoken clarity in its public reports. The commission’s message to financial advisers in its enforcement report for the first half of 2012, which comes under the heading “Honesty”, is one example. “Do not lie or mislead, do not steal others’ money, do not knowingly abuse your position or exploit the trust of the investing public.” Over that period, ASIC penalised money managers for “knowingly issuing misleading statements, stealing from clients and falsifying documents”, as well as banning one adviser for seven years for giving advice that wasn't appropriate to their client’s circumstances.

Blowing the whistle whistle-blower

If you’re misled by an ad, hit with a War and Peace-length PDS or your bank won’t pass on your switching details, let ASIC know. You can also email us at investigation@choice.com.au

 

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