Conflict cop

Transcript of an interview by Alan Kohler with Jeremy Cooper, Deputy Chairman, ASIC, published in the Eureka Report, 21 October 2005.

ASIC is to issue strict new guidelines for stockbrokers aimed at improving disclosure of possible conflicts of interest when they're assessing the performance of companies for private clients.

Under new guidelines revealed in this interview with Eureka Report publisher Alan Kohler, ASIC will demand that brokers disclose the dollar amount they receive in fees from companies they may be recommending to private investors.

Any broker recommending shares in a company while also picking up fees for work will have to reveal the amount of money received from the company in a research note, according to the deputy chairman of ASIC, Jeremy Cooper.

A review of disclosure guidelines has become pressing in recent months as big companies – such as Westfield and Telstra – increasingly hire many different broking companies on a single deal.

Under present regulations stockbrokers do not have to explicitly reveal the dollar income they receive from companies that they also assess for their clients.

Cooper said the regulator is also planning to enforce the new disclosure regime on stockbrokers who may be facing a conflict of interest in takeover situations. He suggested that if a stockbroker issues research on a company while simultaneously acting for the company in a takeover, the dollar amount of fees collected by the broker for takeover advice must be revealed on research documents.

"We want to give the retail consumer some idea of where the adviser sits in all this," says Cooper.

The regulator has also stepped up its attempts to improve standards among financial planners with a range of new initiatives to improve the introduction of Superannuation choice. Cooper also signalled the regulator is planning a crackdown on the sale of life insurance to low income consumers who do not need it.

Now, read on...

Download the full transcript (PDF 52 KB)

Last updated: 21/10/2005 12:00