Financial planning licensees may find themselves required to compulsorily reference check financial planners before they can be employed as a result of concerns flowing from the exit of 37 planners from the National Australia Bank (NAB).
A Parliamentary committee has already recommended making planner reference-checking compulsory for licensees and both Government and Oppositon members of the Senate Economics committee this week expressed concern that a number of the 37 planners to exit NAB employment were continuing to work in the financial planning under new licensees.
In answering questions before the Senate Economics Committee this week, Australian Securities and Investments Commission (ASIC) deputy chairman, Peter Kell, said licensees had a responsibility check the backgrounds of planners and to conduct reference checks, but acknowledged that the process was not compulsory.
However he said a Parliamentary Committee had previously recommended that consideration should be given to making such reference checking mandatory, and this was something which would be welcomed by ASIC.
NSW National Party Senator, John Williams, pointed out to ASIC during this week's committee hearings that he believed the planner register, due to begin operation before the end of this month, might fail in its objective because of the manner in which it did not entirely reflect the conduct of planners.
Williams said he believed the bar with respect to breach-reporting might be set too high with the result that some planner misconduct might not end up being noted on the register.
ASIC is currently working with the NAB to determine the manner in which the bank handled the exit of the 37 planners over a two-year period, whether appropriate breach-reporting procedures were followed and whether the resultant client compensation arrangements were adequate.
