Don’t penalise planners for licensee misdeeds – FPA
The Financial Planning Association (FPA) has sought to insulate financial planners from the alleged misdeeds of their licensees under the new external dispute resolution (EDR) arrangements being readied for implementation by the Federal Treasury.
The FPA wants to provide some insulation for planners who are virtual third parties to disputes by ensuring they have the right to be heard and defend their position in EDR hearings.
An FPA submission to the Treasury has warned that EDR disputes have the potential to harm third parties to a dispute and therefore need the right to be heard.
“In order to help protect against unjustifiable harm, we recommend that … the functions of an EDR scheme also include ensuring that third-parties who may suffer damage as a result of the determination of a matter before the scheme, have a reasonable opportunity to be heard by the scheme in relation to the matter,” the FPA submission said.
It then provided the example of a financial planner whose advice to a consumer on behalf of a licensee was being assessed by the EDR scheme in a dispute between the consumer and the licensee with the danger that planners might suffer reputational damage from an adverse determination.
“The scheme functions should include ensuring that such a financial planner has a reasonable opportunity to be heard,” the FPA submission said. “We would envisage that the scheme rules would restrict the ability of members to prevent such third-parties from being heard in relevant matters.”
Elsewhere in its submission, the FPA urged that those operating the EDR scheme have appropriate expertise in the areas they are dealing with and recommended that the proposed legislation be amended to include the following words: “to ensure that appropriate expertise is used to deal with complaints”.
It said “appropriate” should be defined in the legislation by reference to the particular subject matter of the complaint.
Recommended for you
ASIC has launched court proceedings against the responsible entity of three managed investment schemes with around 600 retail investors.
There is a gap in the market for Australian advisers to help individuals with succession planning as the country has been noted by Capital Group for being overly “hands off” around inheritances.
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
Having peaked at more than 40 per cent growth since the first M&A bid, Insignia Financial shares have returned to earth six months later as the company awaits a final decision from CC Capital.
