AMP’s chief executive, Michael Wilkins, yesterday told the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that education has been key to adviser improvement.
Counsel assisting, Michael Hodge, questioned Wilkins why AMP’s advisers took five years to understand that they had to provide services in exchange for fees, to which Wilkins blamed reforms for the lag.
Wilkins said the adviser network had to “find its way” after the Future of Financial Advice reforms, but following the introduction of education reforms and new audit processes, advisers were starting to place themselves well.
Conceding that education has played a role in advisers’ improvement proves a pretty strong case for the Financial Advisers Standards and Ethics Authority’s (FASEA’s) new reforms, which aim to up the professional standard of advisers in the industry.
Wilkins also told the Royal Commission that the remediation costs had increased from $291 million post tax to $778 million. He said the figure jumped from $415 million pre-tax once AMP made provisions of around $50 million, and $50 million per year in costs to run the program.
Wilkins said the remediation process was expected to take up to three years to fully implement as opposed to 18 months as they initially thought. He said the lag was, in part, due to disagreements on some aspects of the remediation process between the firm and the Australian Securities and Investments Commission (ASIC).
One of the matters in dispute related to what evidence could be used to show whether services were provided to the client, and the other was treatment of issues where services were provided in part.
Wilkins said that banning grandfathered commissions would impact AMP’s business and told Commissioner Kenneth Hayne that the industry would require a further adjustment period of up to three years before completely ridding the commissions.
Comments
This does not support FASEA's approach of forcing highly trained degree qualified advisers to hand over even more money to course providers, many of which are connected with FASEA Board members.
"Lifting adviser standards" is being used as a smokescreen for this conflicted and inappropriate behaviour by FASEA. If FASEA took a reasonable approach to recognising prior education they would be widely and enthusiastically supported by most of the financial planning profession. At the moment their efforts to squeeze more money out of highly educated advisers is detracting from their credibility and true purpose.
Unfortunately Deano, while I agree FASEA is and has acted conflicted, its a bit of the industry getting some of its own medicine really.
If we eradicated the blatant conflicts in the industry like we should have, I doubt we would be in this mess.
Are you saying it's justified based on the famous ethical principle of "two wrongs make a right"?!? Let's not forget that FASEA is also supposed to be about raising ethical standards. How can the government possibly condone a body in charge of ethical standards acting so unethically?
I think they have botched the process but the latest changes make everything more reasonable. Its just easier to complain about it less and accept these changes were always coming as we, the industry, have been unable to get our own house in order.
People have been complaining about needing a financial planning degree for years. If they spent that time completing a financial planning degree, they would have nothing to worry about.
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