Adviser reputation back to square one: Brogden
The Senate Economic References Committee inquiry of the performance of the corporate regulator in relation to the Commonwealth Bank puts the reputation and trust for advisers back to square one, Financial Services Council CEO John Brogden said.
The recent Senate inquiry of the Australian Securities Investments Commission (ASIC) is the most negative finding against the financial services industry since Storm Financial, he said at the FSC/DST CEO Survey launch in Sydney on Wednesday.
"There's no doubt that for the honest hard working advisers out there this was a body blow for them."
Brogden believes the biggest challenge for the industry is shifting and building a culture that fosters good behaviour and weeds out rogue advisers.
"You can legislate until the cows come home and you can require educational standards but what needs to be developed is the culture.
"ASIC will rev up its investigations and that'll deal with the rogues in the marketplace but the only way we'll establish a genuine culture of trust is when the culture is right," he said.
Brogden believes allowing clients to go online on registers to see who their advisers are, who they are licensed to, who their owner is, what their performance history is, and whether they have been suspended is required.
"I think it's very important they know they're dealing with an individual who's a licensee of x and x is owned by y. I think that will be a very significant piece of new information for people."
Another issue is educational standards, which are too low for those wanting to become a financial adviser, and there is a need for advisers to lift their education levels and experience in order to regain trust.
"It's important to note that [the Commonwealth Bank scandal] did happen before the new FOFA rules came in so we do need to give FOFA a chance to do what it's needed to do," Brogden said.
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