The Australian Securities and Investment Commission (ASIC) will launch a shadow-shopping program in the 2009/10 financial year to review the methods of financial advisers. A shadow shop is an anonymous visit to an adviser to experience what an ordinary consumer would experience when seeking advice.
David Whiteley, executive manager of Industry Super Network, says the move is timely considering the financial scandals that have beset the industry in the past year. He believes the shadow shop should be used to improve protection for consumers.
“It is insufficient to just test whether advice meets current legal requirements, which do not provide sufficient consumer protection,” says Whiteley. “The shadow shop must test the nexus between commission sales and poor financial advice.”
A poll conducted by Industry Super Network found that 78 percent of respondents felt the sales commission system compromises the advice given, and more than eight in 10 believe there should be a law that advisers should provide advice only in the client’s best interests.
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