TheFinancial Planning Association (FPA)has admitted that its membership base suffers serious weaknesses in the key areas of disclosure, training, risk management and advice to clients.
The FPA made the admission yesterday at its annual conference with the release of the findings of its yearly National Quality Assessment Program (NQAP).
The program, introduced by the FPA in 2000 to identify issues affecting the financial planning industry, found there had been a marked improvement in the areas of documenting client risk assessments, complying with minimum education requirements and adopting Australian standard compliance systems over the past 12 months.
However the program also found there were key weaknesses amongst FPA members in the disclosure of benefits and incentives, supervision and training of advisers, business risk management and tailoring advice to specific customers.
“Overall, financial planning businesses are performing well, however we want to ensure all planners are purposefully addressing gaps and weaknesses in the quality advice process,” FPA chief executive Ken Breakspear says.
Breakspear says the FPA will roll out a range of initiatives, including two new guidelines, to address some of the weaknesses of its membership base.
The two guidelines, Monitoring and Supervision of Representatives and Scoping the Terms of Engagement, will provide step by step information on how FPA members can improve the quality of their advice, Breakspear says.
“These [guidelines] directly address a number of areas we would like to see improvement in including building stronger planner-client relationships and strengthening the supervision and training of advisers,” he says.
The FPA has also announced that it is reviewing its code of ethics for advisers.
“When we brought out the Code of Ethics and Rules of Professional Conduct in 1992 it set a standard many thought unachievable. At the time these self-regulatory standards far exceeded what was required by law. The introduction of the Financial Services Reform Act in March this year has seen much of the FPA’s quality of advice standards enshrined in the Act,” Breakspear says.
“A panel of FPA staff, members and external experts, including representatives from ASIC, consumer groups and academia, will oversee the review of our professional standards.”
