Ann: Investor presentation - IOOF FY 2018 results, page-89

I noticed on pg 18 in the investor presentation they quoted the positive statement about vertical integration from the ASIC review 18-019MR.

The evidence in the report is actually pretty damning.

For example:

"The review found that, overall, 79% of the financial products on the firms' (the 5 largest vertically integrated firms) approved products lists (APL) were external products and 21% were internal or 'in-house' products. However, 68% of clients’ funds were invested in in-house products."

"ASIC also examined a sample of files to test whether advice to switch to in-house products satisfied the 'best interests' requirements. ASIC found that in 75% of the advice files reviewed the advisers did not demonstrate compliance with the duty to act in the best interests of their clients. Further, 10% of the advice reviewed was likely to leave the customer in a significantly worse financial position."

75% of the time the 5 largest vertically integrated firms did not act in the best interest of their clients!

ASIC needs greater power to regulate this and heavier penalties for non compliance of the law. No doubt it will be a recommendation of the RC.

IOOF may be wise to start self reporting on this and using it as a KPI to differentiate itself from its competitors. Drive the culture internally before the regulator is given a tree trunk instead of their current stick.

https://asic.gov.au/about-asic/medi...ge-conflicts-of-interest-in-financial-advice/