The FinancialPlanning Association (FPA) has forced the Adviser Ratings group into a back down over its plans to publish a ranking of financial planners.
In a letter to Adviser Ratings, the FPA threatened the group with legal action under the Trade Practice Act and the new privacy legislation if it did not radically alter its system for publishing the rating of advisers.
The Adviser Ratings group, which charges planners to be rated, had intended to publish a complete list of all known financial advisers in Australia, including those who had not agreed to be rated.
But the FPA was inundated with complaints from planners after Adviser Ratings contacted the planners saying they would be referred to in the ranking system as having “failed to achieve a rating” if they did not agree to be rated.
Financial planners contacted byMoneyManagementsaid the system would put planners who did not pay to be rated at a disadvantage and was clearly designed to force advisers to pay for the rating.
Money Managementis aware of a number of planning groups who were prepared to pursue legal action independent of the FPA over the controversy.
“[The system] was a grubby grab for subscribers by essentially attempting to blackmail financial planners into getting rated,” one adviser said.
Adviser Ratings chief executive David Childs confirmed toMoney Managementlast week that the group had decided to back down and not list unrated advisers as part of its rankings.
But Childs has hit out at the FPA’s threat of legal action, labelling it as misguided and overly aggressive.
“The FPA sent a rather terse letter to us alleging we’d breached the Trade Practice Act and heaven knows what else, even though we [hadn’t yet] published one adviser’s name. We’ve dealt with their protests but were surprised at their aggressive approach,” he says.
FPA chief executive Ken Breakspear last week refused to endorse Adviser Ratings’ ranking of financial planners.
“FPA members already satisfy our own, the Australian Securities and Investments Commission (ASIC) and legal regulations regarding the quality of planners,” Breakspear says.
