SYDNEY, Dec. 18, 2013 /PRNewswire/ -- An annual global survey of CFA Institute members has found that concerns about mis-selling by financial advisers have increased significantly over the past year in Australia, despite the government's stated intention to restore public confidence in the finance industry in the aftermath of the global financial crisis.
Almost half (48 percent) of Australian members responding to the Global Market Sentiment Survey 2014 regard mis-selling as the most serious ethical issue facing the local market in the coming year, rising from 36 percent last year. The annual survey measured the opinion of 6,561 CFA charterholders and members globally, 1,575 of whom are in Asia Pacific.
Interestingly, controversial trading practices such as high frequency trading and dark pools raised less apprehension amongst Australian respondents (12 percent), although it is the greatest concern for CFA Institute members in the United States. Within Asia, members consider market fraud as the most serious ethical issue facing their local markets.
Globally, the issue of mis-selling is much less of a concern and global respondents also believe its importance in their local markets is decreasing. This is in contrast to Australia where local members believe the issue of mis-selling, such as failing to offer products suitable to an investor's objectives, has worsened in the past year.
Commenting on the global survey's Australian findings, Jason Chesters, president of CFA Society Perth, says, "Our Australian members are showing increasing concern that the Future of Financial Advice (FOFA) reforms have yet to address the issue of mis-selling by financial advisers. This is perhaps exacerbated by indications that the new government will change 'best interest' provisions as part of the rollback of FOFA. We acknowledge the government's desire to reduce red tape but encourage it to implement policy that improves Australians' access to high quality advice that is in their best interest."
Respondents worldwide believe that a lack of ethical culture within financial firms is the largest contributor to the lack of trust in the finance industry.
"A strong foundation in ethical principles and standards is essential across the financial services industry to regain the trust of investors, but perhaps no more so than in the provision of advice," Chesters adds. "CFA Societies Australia is pleased that ASIC is taking steps to improve the quality of advice offered to retail clients by enhancing the minimum training standards required under RG 146. In particular, we hope that ASIC includes education and training on ethics, as proposed in its recent Consultation Paper. This has not been part of the standards before and represents an important step forwards."
To review the complete report and survey results, visit http://www.cfainstitute.org/gmss.
Highlights of the CFA Institute Global Market Sentiment Survey 2014:
Economic outlook:
Markets outlook:
Risks to growth:
Real estate bubble concerns: