Tough rules loom for planners

30 April 2018

Financial planners are facing the prospect of much tougher and coordinated disciplinary arrangements as a result of the appearances of the Financial Planning Association (FPA), the Association of Financial Advisers (AFA) and the Australian Securities and Investments Commission (ASIC) before the Royal Commission.

Senior counsel assisting the Royal Commission, Rowena Orr QC used her summing up of the appearances to point to the significant gaps which exist in the regulatory and disciplinary regime and to suggest scope for significant improvement in the future.

In particular, she suggested that the obligations under the Corporations Act may have been set at too high a level of generality to be capable of actually being enforced.

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Orr said this then raised the question of what alternative obligations would be more appropriate and whether the current division of responsibility for professional discipline of financial advisers between employers, ASIC and professional associations was operating effectively to ensure that financial advisers faced appropriate consequences for breaching their statutory and professional obligations.

“Does that division of responsibility create gaps in the disciplinary system?” she asked. “If so, what are they? Is it possible to implement a single system for professional discipline of financial advisers? Would structural changes to the financial advice industry be required to bring that about?”

Orr also quested whether a system of licensing at both an individual and an entity level would be more appropriate than the existing system of licensing only at the entity level.


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Great. Let's enforce the same standards on politicians and public servants!

On the right track but why blame the 90%of planners who do the right thing for the bad cultures of the banks and life insurance companies There is already too much duplication of regulations and red tape in the Industry. This needs to be streamlined and simplified to reduce costs to consumers. ASIC is clearly not doing the job and a new body needs to be created to supervise the Industry and the product providers.

The problem is Chris F that it's not 90% of planners that are doing the right thing. The banks and AMP directly or indirectly (through aligned licencees) employ a huge percentage of the industry. Regulation is not the solution, FOFA never tackled the underlying issue of Advisers being employed by product manufacturers, until there is a structural change, that will continue to be the problem. What we will get though is more regulation because the Government needs to be seen to be doing something.

Its not ASIC's limited resources that have been responsible for RC's findings as they have claimed, its the way they have been carrying out their regulatory tasks. Had they been carrying out risk based audits from the start they would have been looking closely at the big banks and Insurance Companies where the problems have always been in financial planning over the past 20 years. Also had they been looking at individual products they would have targeted margin lending and SMSF's (where further problems exist). They need to be replaced by a more proactive Regulator . Financial Planning is too important to be taken lightly.

How about we stop the hype and reflect on the 2015 RC into trade unions, and I quote Justice Heydon from an ABC News report of 30 December 2015: "The final report of the Royal Commission into Trade Union Governance and Corruption has referred to "widespread and deep-seated" misconduct by union officials." "It is clear that in many parts of the world constituted by Australian trade union officials, there is room for louts, thugs, bullies, thieves, perjurers, those who threaten violence, errant fiduciaries and organisers of boycotts." "They are not the work of a few rogue unions, or a few rogue officials. The misconduct exhibits great variety. It is widespread. It is deep-seated.There has been much perjury. A huge amount of the testimony given in hearings has been false to the knowledge of the witnesses."

And what has happened since then? Nothing. A few minor penalties and the world goes back to normal for these "louts thugs, bullies and thieves".

So on the one hand we have essentially a legalised quasi-criminal organisation who openly flaunt their disregard for the law, and three years on it is old news and no changes made, and yet this farce of a RC still has wet ink and every media outlet is shouting about impending change and further enforced regulations? WTAF? Am I missing something?

Yes, we are meant to be a profession and yes, some big insto's and others have been caught lying or doing the wrong thing, but seriously? We could have saved the nation $50mill and told them that at the start if they would have listened,

In comparison to the Union scandals, our miscreants may be on a par but the fact remains I don't see any Union guts hanging from the main mast, or major reforms in their industry 3 years on.

In fact, given the facts uncovered by the Union RC and the total lack of appearance of union based ISA funds predominantly filled with union board members, (remember, those louts, thugs, bullies, thieves and liars mentioned above?), it makes me wonder if the seemingly impenetrable shield Labor offers these guys when it comes to ASIC investigations, also extended to this pretense of a RC.

Was the outcome of our RC already determined and agreed well before the first day?

Who should have the power to decide on whether an Adviser is to remain licensed; ASIC or the FPA/AFA? If Vertical Integration remains, the banks will want the lower standards that ASIC applies. Non-aligned advisers might prefer an empowered FPA/AFA but who is going to pay for the beefed up review system?

Seems like a lack of action by the FPA will lead to Government intervention which ultimately leads to more compliance and red tape. The very reason why associations are formed in the first place. This industry will never become a profession when the very association that claims to represent them behaves in the manner they do. Here we have the RC asking questions about the relationship between advice and distribution and yet the FPA is getting payments from AMP,CBA via the professional partner program. FPA members need to have an enquiry into the FPA itself.

I agree, it has become a conflicted mess with poor governance in its own right. I checked the FSG's of several members on the Conduct Review Committee - many receive volume bonuses on grandfathered platforms, are vertically integrated, are institutionally aligned etc etc All the things the RC has pointed out as poor practice. And the question of whether the FPA is serious about advised conduct when it won't release names, and/or at the same time is promoting positive advice. What hope is there.

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