Good advisers embrace ‘spirit’ of law

The financial planning industry doesn’t necessarily need any more laws, but if advisers had not only abided by the laws that already exist and the spirt of those laws, instances of fee for no service are most unlikely to have occurred, according to Synchron compliance manager, Michael Jones.

In a column to be published in Money Management, Jones pointed to the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and urged that more people follow the rules that are already in place an “apply common sense and ethics to areas where the rules run out or become fuzzy”.

“That’s why ethics and behavioural finance are such a big focus under professional standards, and such a big part of the training we’ll need to do for FASEA [Financial Adviser Standards and Ethics Authority],” he said.

Jones said he believed it was important that advisers understood why they needed to follow the rules, in circumstances where anyone working in a compliance or legal role had heard phrases such as “show me in the law where it says I can’t do X”.

“That is where recognising the spirit versus the letter of the law, and the use of judgement, come into play,” he said.

Jones said that while the Corporations Act may not actually state “if you sign an agreement with a client to provide services for money, you should actually provide those services” it was self-evident that this was required.

“While it may be technically legal to act in certain ways and do certain things in the industry, some of these are simply the wrong thing to do,” he said.




There were advisers linked to fee for no service, however can we please remember there are a lot of us that actually work for our money, and always have? I have 150 clients, its a small business, its nothing like a adviser on wages with 400 to 500 clients that needs to get more and more to keep thier masters happy. We as a industry need to stop tarring each other with the same brush. Fee for no service was due to people having too many clients, too much staff turnover, kpis aligned with greed....its not something us smaller operators can afford to do. We need to know each and every client very well to keep the on the books, all clients need to opt in every 2 years, all clients need annual FDS....wthese days you cant really get away with fee for no service, this is why the banks are getting out, they cant do the volume anymore, they know its not cost effective anymore. Us smaller operators, we just need to make enough money to keep our families happy, you dont believe me come and spend a day in the office.

Advisers with 30 years experience have been applying 'Clients' Best Interests Duties' without a client complaint in 30 years. It is virtually impossible to have a Law to define each and every duty imaginable. Royal Commission found banks failed on Clients' Best Interests Duties because it is ASIC RG244 but its not in Law. Irrespective of Law, good advisers will continue to perform clients best interests duties, because we live in the Australian community and we care for our clients, ie, Duty of Care under Common Law.

100% spot on Hang

the reality is, FOFA & Opt In are making servicing of small clients uneconomic. No worries, the new AMPs, the large industry super funds, now have inhouse vertically integrated salaried advisers who are doing exactly what most other advisers are now banned by ASIC from doing. ie they are providing advice, paid for by the other members (who arent receiving advice) and with the luxury of these inhouse integrated advisers not having to get biannual Opt Ins signed. Nice racket if you can crack it. Makes you wonder why no other super fund provider cannot can set up this racket?

Add new comment