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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

ASIC to target vertical integration.

27 September 2013

ASIC has indicated that it is widening its investigation into conflicts of interest in the financial advice sector and integrated advice businesses are its sight.

Commenting in response to suggestions that the issue has been overlooked under FOFA reforms, Louise Macaulay, ASIC senior executive, financial advisers has made comment at the recent Finsia conference that, “the issue was firmly in the regulator’s sights…where product manufacturers and dealer groups are integrated and are incentivising for recommendation of a particular product, this can assist in replacing the lost benefits from conflicted remuneration under FOFA in that it gives an avenue for businesses to grow their client base.”

In reaction to ASIC’s investigation the CBA has implemented structural changes to ensure it is ready for any regulatory surveillance of vertically integrated businesses.
The senior ASIC adviser has said, “the industry should expect regulatory surveillance of vertically integrated models and that ASIC has concerns about client awareness of perceived conflicts.”

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