Members of the Financial Services Council (FSC) should not have to help underwrite a last resort compensation scheme in circumstances where they already stand behind their advisers and compensate clients when things go wrong.
A public hearing of the Senate Economics Committee inquiry into consumer protection in the banking, insurance and financial sector has been told by the FSC that its members do not believe they should be required to stand behind the poor advice of advisers they do not employ.
FSC senior policy adviser, Blake Briggs told South Australian Senator, Nick Xenophon that for the members the FSC covered, “we can say that they are well run institutions where their advisers clearly met a higher standard and the institution stood behind the advisers. When the advisers made mistakes or did the wrong thing, the institutions stood behind the advice that was given”.
He said he believed what Senator Xenophon was asking was: “can the costs of their [other adviser’s] poor advice be transferred onto other institutions that have higher standards for the advisers that they recruit?”
“Our guys go out, train their advisers better, stand behind the advice they give, and, if something goes wrong, cover it,” Briggs said. “They also have better ongoing systems and they have better adherence to the best duty in FOFA [Future of Financial Advice].”
“What you are now asking is: would we also stand behind the advisers that we do not employ?” he told the Senator.
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"When the advisers made mistakes or did the wrong thing, the institutions stood behind the advice that was given”. That's fine, but what about when product manufacturers make mistakes or mislead the advisers, and research houses haven't done their duty properly? Do the banks just pay out for that also...and is that a sales pitch their advisers use to attract clients? We can compensate, but other can't.
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