Australia’s financial services industry is back in the spotlight this week after a prominent business leader played down media and regulator criticism.

Australian Wealth Management (AWM) MD Chris Kelaher says recent controversy surrounding conflicts of interest is a storm in a teacup.

The industry has faced increased scrutiny after an Australian Securities and Investments Commission (ASIC) “shadow shopping” exercise found that bad advice could be linked to conflicts of interest involving adviser remuneration.

Consumers were six times more likely to receive “bad” advice when a conflict existed – even if that conflict was properly disclosed.

But Mr Kelaher says it is all just a product of the industry’s youth.

“The financial planning industry is a relatively new industry and so is coming under its share of scrutiny,” he said. “As the industry matures, it will be seen as a bit of history.”

He says shadow shopping exercises would uncover anomalies in any industry, and the actual level of misconduct among financial advisers is much lower than some believe.

But not everyone agrees. The Australian Shareholders Association says the furore is anything but small change. Deputy Chairman John Curry says retail investors have little confidence in the industry’s ability to avoid conflicts of interest and are calling for ASIC to step in.

AWM announced a $23.7 million net profit for the 2006 financial year – up 64% on last year’s effort.