05-79 ASIC to go shadow shopping
Friday 1 April 2005
The Australian Securities and Investments Commission (ASIC) will use 300 real consumers to check what advice people are given when they seek information about their superannuation.
‘ASIC will conduct a nation-wide shadow shopping survey to monitor the advice that financial advisers give their clients around the start of superannuation choice in July 2005’, said Mr Greg Tanzer, ASIC’s Executive Director of Consumer Protection.
‘Our 300 real consumers will be recruited by a market research firm and, to ensure the results aren’t distorted, advisers will not be notified that they are being surveyed’, he said.
ASIC’s survey will cover the full range of superannuation advice, namely:
- all financial advisers, including banks, financial planners and accountants;
- advice on retail funds, industry funds, corporate funds and self-managed super funds; and
- all states and territories.
‘The shadow shopping technique gives strong insights into the consumer’s real life experience of getting advice. It is a helpful technique to understand not only what documentation consumers were given, but also what they were told and how relevant the advice was to their needs’, Mr Tanzer said.
‘We will also be checking whether the financial advice complies with the law, particularly whether advisers have met their legal obligations related to switching’, he said. These obligations include that the adviser finds out about the client’s current superannuation arrangements and considers any potential lost benefits or transfer costs before recommending a change.
Due to the large sample size, a professional compliance firm will be engaged to assist ASIC assess the legal compliance of the 300 examples of advice. If legal breaches are discovered, ASIC will determine what enforcement action is appropriate.
‘We will release the survey results progressively as preliminary information becomes available, and a final report is expected around the end of 2005’, Mr Tanzer said.
ASIC’s shadow shopping survey is just one part of its broad campaign to ensure consumers are protected during the introduction of super choice. Other ASIC projects include:
- monitoring financial services licensees, including by file reviews;
- monitoring advertising for misleading claims by financial advisers or super funds;
- monitoring complaints and industry trends;
- further guidance to the industry about appropriate standards; and
- enforcement action where significant breaches are observed.
Background
Superannuation choice begins on 1 July 2005, and by 28 July 2005, around five million employees will have received a form giving them the option to choose the fund into which their compulsory superannuation guarantee contributions will be paid.
ASIC’s superannuation choice shadow shopping survey is distinct from the ASIC-Australian Consumers Association (ACA) quality of advice surveys that have been conducted about every three years. ASIC expects to conduct further quality of advice surveys with the ACA in future.
ASIC Website: Printed 02/10/2010
