This week, Australia’s corporate watchdog revealed a list of ten institutions that it has been scrutinising as a part of a campaign to improve advice provided to consumers regarding complex financial products.
The revelation from ASIC follow recent news of NAB paying approximately $10-15 million in compensation to investors who had been provided with inappropriate advice by its financial planners.
Leading Sydney based boutique law firm Levitt Robinson Solicitors, which represents thousands of “mum and dad” investors who were sent to financial ruin in the wake of the collapse of Storm Financial, has long warned of the dangers of advice from rogue financial planners.
“Too often, dodgy financial advice is provided to unsophisticated investors who do not understand the complexity of the products they are investing in or the risks involved” Stephanie Carmichael said, a Senior Associate at Levitt Robinson.
Complex financial products are described by ASIC as investments that are based in the movement of underlying investments, such as the share index. They are often labelled as ‘capital protected’ products, erroneously attracting consumers under the pretence that the risky products are safe investments.
Amongst the institutions named by ASIC were HSBC, Westpac Banking Corp, and Commonwealth Bank subsidiary Count Financial.
This alarming development highlights the inappropriate conduct of advisers working in high–end financial institutions, and has sparked renewed calls for a royal commission into the industry.
“For too long, countless unsophisticated investors have unwittingly risked everything through making investments based on inaccurate and impersonal advice,” Ms Carmichael said.
“ASIC’s current campaign is a step in the right direction, but more needs to be done to raise the standards of financial advice, without also overregulating the market.”