The Parliamentary Joint Committee on Corporations and Financial Services has heard from both Macquarie and BT Financial that advisers are not employed to sell financial products.
As part of the PJC inquiry into ASIC, the Committee raised the issue that both banks make financial products and “also employ advisers to sell those products”. Both banks were asked whether their planners were subject to sales targets.
BT Financial said that no product sales targets were imposed on financial advisers. Salaried advisers (from Westpac Financial Planning and St.George Financial Planning) have revenue targets and planners participate in a bonus scheme. However, all revenue and asset categories or products are treated equally under the scheme, said the bank.
“Salaried advisers are only eligible to participate in the bonus scheme if they have met certain requirements within a particular period (including feedback from customers and meeting compliance requirements). There are no sales targets relating to particular products, Westpac Group products or asset classes.”
In their owned adviser channels, such as Securitor and BT Select, there are no sales or revenue targets.
Macquarie also denied having any sales targets. Performance-related remuneration is applied equally to Macquarie issued and externally issued products, which means advisers are not incentivised to recommend Macquarie products, said the bank.
The banks also went through their processes for approving products. BT Financial said that all decisions on APLs are made independent of product issuers.
“Planners are ultimately responsible for determining what products are appropriate for their customers’ circumstances. We support our planners in order to meet this obligation, and have trained the planners to understand our process to establish the APL and their responsibilities to ensure they have separately considered any product they are considering recommending in light of the customers’ needs and objectives.”
Products are also compared against others in the market to determine their suitability for inclusion on the list.
Macquarie said that in order for a fund or product to be proposed for consideration for inclusion to the menu (in the majority of cases) an investment grade rating by an external research house is required. Funds or products available are also assessed by their Unlisted Investment Committee.