The Financial Planning Association’s (FPA) investigation into Storm Financial provided it with a basis to lay charges against the collapsed financial planning group, but the details of the group’s breaches of professional conduct will not emerge in this particular forum as the group’s membership to the industry body has been terminated.
The FPA has taken criticism in recent weeks for what some have perceived to be too soft a stance on the issues surrounding the advice given to clients of Storm Financial. In recent weeks FPA chief executive Jo-Anne Bloch has maintained that all members of the industry body deserve a fair and thorough investigation before conclusions are drawn.
Bloch said today that the FPA’s investigation, launched in November last year on the back of concerns expressed by FPA members and Storm client complaints, did lead the FPA to identify possible charges against Storm as a principal member of the industry body. But the details of the breaches of professional conduct under which the FPA found Storm guilty will remain unknown. As reported by Money Management earlier this week, the FPA’s constitution states the entry of a company into administration necessitates a termination of its membership. As such, the investigation into Storm as a principal member has fallen away.
The FPA maintains it takes complaints against members “very seriously”. The industry body is continuing its investigations around 10 former Storm planners who are members of the FPA, four of whom are Certified Financial Planners.
“Investors need to know that they can trust the advice they receive from financial planners who are members of the FPA,” Bloch said.
“The FPA will not accept unethical behaviour or practices by any of its members, the vast majority of whom always put their clients first.”
Bloch said the FPA will not tolerate behaviour that breaches its Code of Ethics or Rules of Professional Conduct, or behaviour that “damages the reputation of the entire industry”.
The FPA states that financial planners have a responsibility to ensure investments are suited to a client’s risk profile – the issue that is at the heart of the Storm situation. But Bloch also said today a client/planner relationship should be considered “a 50/50 relationship”.
Bloch’s advice to consumers is not to “hesitate to challenge your financial planner if you’re unsure of the advice you’re getting”. This could include seeking a second opinion, while also being mindful of the old adage ‘if it sounds too good to be true, it probably is’.
The FPA said it remains committed to assisting investors damaged by the collapse, with members in Queensland continuing to provide advice to former clients of Storm. Bloch said while the initial urgent need was for those clients in margin call over recent months, that need expanded dramatically when Storm shut its doors.
Bloch and other FPA representatives will travel to Townsville next week to present to FPA members, former Storm clients and the media.
