FPA to audit disclosure

The Financial Planning Association is to audit financial planning groups to ensure its members adhere to the association’s disclosure regime.

The Financial Planning Association is to audit financial planning groups to ensure its members adhere to the association’s disclosure regime.

FPA chief executive Michael McKenna released details of the initiative while launching the FPA’s latest guideline on disclosure of fees and commissions.

Each principal member of the FPA can expect to be audited every three years by FPA staff for their compliance to the FPA’s Rule 106, which requires members to disclose all commissions, including soft dollar commissions, to clients. The FPA is calling the audits “quality assurance reviews” and says they “will assist them (the principal members) in achieving high standards of service delivery to clients.

If a group is found to be breaching the rule, the FPA can either fine the group, force it to do training or expel them from the association. McKenna says there has been “less than 10” breaches of Rule 106 in the past year.

FPA chairman Ray Griffin says the new disciplinary procedures that ensures that if an FPA member breaches any of the association’s standards, they will be held account-able.

The FPA Board has given “in principle support” for the disciplinary framework and the guidelines are now available for members.

Griffin says the new guideline explains the nuts and bolts of disclosure and guides planners as to how they may disclose all commissions.

“The new practice guideline provides a best practice model for planners including a summary of the obligation to disclose all fees and commissions to their clients and how those fees and commissions should be disclosed,” he says.

“Full disclosure of commissions and other benefits allows clients to be the judge about the degree to which benefits may impact on financial planner activity.”