The 'Investigation into charging of advice fees without providing advice', as brought to you by the Australian Securities and Investments Commission (ASIC), is a real cracker.
"ASIC is investigating multiple instances of licensees charging clientsfor financial advice, including annual advice reviews, where the advice was not provided," the progress report on the regulator's investigation says. "Most of the fees have been charged as part of a client's service agreement with their financial adviser."
The investigation is part of ASIC's 'Wealth Management Project' launched last October, which is probing Australia's "largest financial advice firms" - mostly bank-owned operations.
ASIC began its project after advice scandals erupted in the Commonwealth Bank of Australia and the National Australia Bank.
While both the above banks have NZ offspring there's no suggestion Australian advice practices have been exported here. NZ bank-owned advisory businesses are probably more strait-laced than their Australian cousins - notwithstanding the Financial Markets Authority (FMA) probe into bank KiwiSaver selling practices.
NZ bank advisers are, at least, easily identified: they work in banks and may, or may not, wear bank-branded uniforms. In Australian the situation is more confusing as all the banks own, or have a stake in, multiple advice brands which don't always wear their institutional allegiances on their sleeves.
There's also much more scope in Australia for consumers to lose track of fees they are paying advisers. I have heard many stories of businesses built out of fees/commissions paid by clients the advisers have never seen.
Bearing that in mind, the 'Investigation into charging of advice fees without providing advice' is not so surprising.
But why do consumers pay for advice they never get? Perhaps an Australian Senate inquiry into bank advice practices, scheduled for today (Tuesday), will get to the bottom of that issue.
