Compliance issues continue to erode BOLR pay-outs

The private contractual nature of Buyer of Last Resort (BOLR) arrangements has meant that the major financial planning organisations have had little scope to become involved in the issues which have arisen between planners and their licensees.

Amid continuing reports that the value of BOLR arrangements have been eroded through the so-called “weaponization” of compliance audits and the Government’s decision to hand the Australian Financial Complaints Authority (AFCA) the ability to look back at complaints dating back 10 years, advisers have found themselves facing some tough decisions.

This much was acknowledged by Financial Planning Association (FPA) chief executive, Dante De Gori, who said while issues around BOLR had been raised by members during his organisation’s recent national roadshow, there was little that could be done because of the individual nature of the BOLR contracts.

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He said that, very often, the best advice that could be given was that affected planners should contact their lawyers.

Association of Financial Advisers (AFA) chief executive, Phil Kewin, said that his organisation was similar aware of some of the BOLR issues but not closely involved.

At least one of the problems which has emerged is adviser record-keeping in circumstances where industry convention has held that records should be kept for a minimum of seven years but where the Australian Securities and Investments Commission (ASIC) fee for no service investigations and AFCA’s legacy complaints changes are looking back 10 years.

Advisers have told Money Management that the imposition of tough compliance audits had seen the value of some BOLR pay-outs reduced to as little as one times earnings.

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I feel for the planners being held hostage to their licensees - however let’s not forget that it’s meant to be the buyer of LAST resort. Go and find a decent book broker and you’ll get at least 2x in broader market then tell your AFSL holder to go and jump in the lake. If they refuse to release your clients, take them to court and see if they want the media coverage.

Promises of something invariably turn into empty promises and a way to manipulate a vulnerable recipient.
It is no different in a personal relationship....where the person who cares least,retains the control.
Finding or creating a way out of something to your advantage , is much easier when empathy is missing.
Just ask how the handling of Agency Development Loans in the 1980's played out and how a number of long standing agents/advisers took their own lives when pushed to pay back monies they were very loosely advised by managers they would never ever have to repay.
If you were to say that advisers currently feel abandoned, victimized and vulnerable, it would be a significant understatement.
They have unjustly been the punching bag of all and sundry for the last decade because it's the easiest route to take.
It's easier to attack a small target than a large one and easier still when the level of care and empathy is non-existent.
It would be interesting to see how Dr. Simon Longstaff from the The Ethics Centre would make comment not about how advisers should be addressing their own ethical responsibilities, but how the ethical treatment of advisers by their licensees, by ASIC and by the media has played out over the last decade or so.
Has the treatment and assessment of advisers in general been ethical in it's approach or has it in fact been influenced by a pre-determined perception and an ability to attack a generally defenseless sector.

Spot on Agent 86!

and they talk about financial planners behaving unethically!

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