Big financial planning groups, including those owned by banks, are concentrating their product recommendations on a few key products. In many cases, these products are issued by companies related to the financial services' licensee.This was the main finding of an Australian Securities and Investment Commission review of the 20 largest Australian financial services licensees that provide financial product advice to retail clients.The top 20 had a total of 13,000 individual advisers and 4.6 million clients, of which 1.5 million were identified as active.ASIC was looking at financial advice compliance systems and the key risk factors facing the gatekeepers in the financial services industry.Releasing the results of the review yesterday, ASIC said: "Management of conflicts of interest remains the critical risk that requires more attention from licensees."Large financial groups use an approved products list with hundreds of investment products. However, ASIC found that the top three products on many licensees' approved products lists "dominate and concentrate" most of the asset allocations.ASIC said: "Licensees should be able to demonstrate to clients and ASIC that these products are appropriate for each client to whom they are recommended."Some of the other issues that arose from the review were that licensees needed to improve their audit practices, be more diligent about checking references, and change record-keeping systems.All licensees conduct audits to examine the appropriateness of advice, although some notify advisers ahead of time of the files to be reviewed. ASIC also said many licensees were not checking references for new advisers with the previous licensee. "This practice allows bad apples to continue in the industry."And many licensees do not retain copies of client records separately from advisers. This may lead to difficulties for licensees responding to complaints.