Press Releases and Announcements - 10 September 2011
Vulnerable Australians caught out by adviser sales targets
Rogue advisers and bank staff are preying on elderly and vulnerable
Australians by pressuring them to sign up for financial products
without any regard for their clients' circumstances, says Maurice
Blackburn financial specialist lawyer Briohny Coglin.
Ms Coglin said an increasing number of clients were contacting the
firm because they were locked into highly geared and high risk
financial products without proper assessment of their personal and
financial situation.
"Over the past twelve months there has been an increase in reports
of financial advisers taking advantage of vulnerable members of the
community," Ms Coglin said.
"The clients may be elderly, speak English as a second language, or
are simply people with little understanding of financial products
and markets, but in all cases the common thread is the complete
trust they put in their financial adviser.
"The law needs to recognise that there is this complexity and
expertise on the one hand, and vulnerability and lack of
understanding on the other."
Ms Coglin said such cases underlined the importance of the Federal
Government's current Future of Financial Advice reforms, in
particular the recently announced statutory duty for financial
advisers to act in their clients' best interests.
"There needs to be recognition that despite strict legal
requirements to disclose any conflicts of interest, advisers
continue to recommend products that are clearly inappropriate for
their clients," she said.
"The current disclosure laws do not appear to have stopped
financial advisers from recommending products to clients in order
to attract high commissions or meet sales targets.
"That is why Maurice Blackburn is awaiting the government's
announcement with respect to conflicted remuneration. The
announcement, due any day, is expected to ban a range of
commissions and volume based or sales target based payments to
financial advisers.
"There is a widely held perception that financial advisers are only
interested in kickbacks rather than providing tailored advice which
is appropriate for each individual.
"Bans on types of commissions and volume based or sales target
payments will do a great deal to restore the public's confidence in
the industry and give consumers the protection they clearly
require."
To read Maurice Blackburn's submission to the Review of
Compensation Arrangements for Consumers of Financial Services visit
www.mauriceblackburn.com.au
Rogue advisers and bank staff are preying on elderly and
vulnerable Australians by pressuring them to sign up for financial
products without any regard for their clients' circumstances, says
Maurice Blackburn financial specialist lawyer Briohny Coglin.
Ms Coglin said an increasing number of clients were contacting
the firm because they were locked into highly geared and high risk
financial products without proper assessment of their personal and
financial situation.
"Over the past twelve months there has been an increase in
reports of financial advisers taking advantage of vulnerable
members of the community," Ms Coglin said.
"The clients may be elderly, speak English as a second language,
or are simply people with little understanding of financial
products and markets, but in all cases the common thread is the
complete trust they put in their financial adviser.
"The law needs to recognise that there is this complexity and
expertise on the one hand, and vulnerability and lack of
understanding on the other."
Ms Coglin said such cases underlined the importance of the
Federal Government's current Future of Financial Advice reforms, in
particular the recently announced statutory duty for financial
advisers to act in their clients' best interests.
"There needs to be recognition that despite strict legal
requirements to disclose any conflicts of interest, advisers
continue to recommend products that are clearly inappropriate for
their clients," she said.
"The current disclosure laws do not appear to have stopped
financial advisers from recommending products to clients in order
to attract high commissions or meet sales targets.
"That is why Maurice Blackburn is awaiting the government's
announcement with respect to conflicted remuneration. The
announcement, due any day, is expected to ban a range of
commissions and volume based or sales target based payments to
financial advisers.
"There is a widely held perception that financial advisers are
only interested in kickbacks rather than providing tailored advice
which is appropriate for each individual.
"Bans on types of commissions and volume based or sales target
payments will do a great deal to restore the public's confidence in
the industry and give consumers the protection they clearly
require."
Read the Review of Compensation Arrangements for Consumers
of Financial Services.