Governance principles should be licence requirement
Australia’s existing financial services compliance arrangements fail to take account of the organisational environment in which advice and decision-making occur within financial services groups, according to a submission to the Joint Parliamentary Inquiry filed by Argyle Lawyers and Victoria University.
The submission claims the existing regulatory regime encourages a tick-the-box approach to compliance without promoting an ethical culture.
On that basis, it recommends that financial services organisations be required to comply with Australian Corporate Governance Principles to build and maintain systems and procedures that support ethical cultural and ethical decision-making and that these should be built into the financial services licensing process.
Argyle Lawyers principal June Smith said that history seemed to be repeating itself when financial advisory groups and product providers collapsed.
“The same gaps in conduct and culture at all levels of these organisations are evident, and every time the same types of regulatory and legal responses seem to be wheeled out to fix the problem,” she said.
Smith said the submission was not calling for more regulation because most of the governance reforms that had been suggested already exist.
“However, we are calling for more effective regulation that deals with the underlying conduct and individual accountability of those at board, management and employee level,” she said.
AUTHOR
Mike Taylor
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
