AXAhas made a bid to release itself from a catch-22 situation, having contractually agreed to allow advisers to hold client information if they leave the dealer group, despite it contradicting privacy legislation.
AXA has lodged a submission with the Federal Privacy Commissioner arguing that advisers should retain client information when changing dealers, against a Privacy Act requirement that states dealer groups are to hold on to those clients should they not get their express written consent to move with the adviser.
The submission was prepared in tandem with the Authorised Representatives Association (ARA), which represents the interests of 650 AXA advisers. It could set a precedent for the entire planning industry if it is successful in effecting change to the Act or secures an exemption for AXA allowing it to honour contractual agreements it has with advisers to take clients when leaving.
ARA chairman Leo Menkins says there are a number of dealer groups in the market that are letting clients go without their written consent and going against the letter of the law.
He says that AXA will not go down that path, and will be forced to abide by privacy legislation in conflict with the agreement it has in place with its advisers unless the Act is changed.
“AXA could turn a blind eye like other dealer groups are doing right now and just let it happen, but if it blew up and someone came back and complained, the institution would be in a heck of a state,” Menkins says.
AXA first expressed concern over the legislation in December 2002, after legal advice it sought with the ARA found the Privacy Act required the dealer to hold clients if they hadn’t received proper written consent.
However, Synergy Advisory Services managing director Phil Little, who was about to take on a number of AXA advisers before AXA flagged the law as a problem, says that AXA had continually announced to potential recruits and existing advisers over two years that from January they could take their clients.
Little says he believes AXA “got a whiff” of some advisers leaving the group and invoked the privacy legislation, an issue that’s been in the market for over a year, to keep the advisers within the group.
He says that AXA’s “convenient” use of the legislation is indicated by its contradiction in allowing the transfer of multi-agents’ client files.
One adviser due to move to Synergy has decided to stay with AXA until the issue is resolved, although another group of advisers is planning to move across despite potential client loss.
Until the situation is resolved, Menkins says AXA will adopt a policy of sending out letters to all clients of departing advisers requesting their sign-off.
However, Menkins says that due to client apathy, this is not an acceptable outcome for the industry, with Little labelling this strategy a “pseudo-barrier to exiting the group”.
