For a fleeting moment it appeared that the reputation of the Australian financial planning industry would not be unduly sullied by the collapse of Opes Prime and the resultant fallout and recriminations.

It was to be hoped that when it came to complex structures and high levels of leverage, financial planners would have sensed the inherent danger in the Opes Prime model and urged a cautious approach on the part of even their most sophisticated clients.

Sadly, events have revealed that a number of financial planners not only took the somewhat generous commissions on offer from Opes Prime, but also indulged in the cut-price margin loans the collapsed broker was prepared to offer those who saw fit to refer business.

The chief executive of the Financial Planning Association, Jo-Anne Bloch, and members of her board must be feeling deep frustration at the publicity that has surrounded the involvement of financial planners in Opes Prime – a frustration borne of the certainty that such publicity only serves to reinforce inappropriate stereotypes.

There is no shortage of critics where the financial planning industry is concerned and no shortage of commentators prepared to suggest that planner exposure to collapses such as Westpoint and Opes Prime are symptomatic of the broader industry.

And so far as Opes Prime is concerned, the initial reports do not look good for the financial planning industry – particularly the suggestion that some planners embraced accessing cut-price margin loans with almost unrestrained enthusiasm. Cut-price margin loans might not be quite the same as an all expenses paid trip to a five star resort, but they can nonetheless be perceived as a form of soft dollar and something highly unlikely to have been revealed to clients.

Of course, the bottom line is that the number of planners caught up in the Opes Prime saga represents a tiny fraction of the number making up the total financial advice industry, and it is arguable that these people represent exceptions to the industry’s normal patterns of behaviour.

The problem with this argument is that Australian consumers have been witness to a number of significant collapses over the past 18 months and all too often media reports have emerged detailing the involvement of financial planners – some of them from highly reputable firms.

The fact that this continues to be the case sends a clear message to the Financial Planning Association and other industry bodies that no matter how hard they have worked to lift industry standards, more work needs to be done.

– Mike Taylor