The Australian Securities and Investments Commission (ASIC) will scrutinise vertical integration in banks over the next financial year.

“We see structural change heightening the importance of quality financial advice and will focus our attention in this area and on enhancing the professionalism of financial advisers to meet the long-term challenge,” the regulator says in its new corporate plan.

“The quality of financial advice continues to be adversely affected by advisers’ conflicts of interest or poor competence.

“This can lead to some people being encouraged or advised to make financial decisions not in their best interests, resulting in losses they cannot afford.”

ASIC says vertical integration can lead to conflicts of interest and poor advice.

It intends to tackle conflicted advice, misaligned incentives and “inadequate risk management, particularly in large, vertically integrated institutions”.

It is also targeting advice that is not in clients’ best interests, to remove “bad apple” advisers.

Chairman Greg Medcraft says when the regulator uncovers non-compliance, it will act quickly.

“We achieve the best risk resilience in the system that we can with the resources we have,” Mr Medcraft said.

“We are on the cusp of change and our corporate plan shows we are well placed to embrace the likely opportunities to flow from the Government’s response to the Financial System Inquiry and its capability review of ASIC.”