It should have escaped no one’s attention in the financial planning industry that an agenda exists to pressure the Federal Government into holding a Royal Commission into the planning industry.
If there were any doubt about the existence of that agenda then it should have been scotched by newspaper reports in late February outlining yet another financial planning failure — this time involving National Australia Bank.
The story relating to NAB clearly represented a follow-up to the reporting around the Commonwealth Bank Financial Planning failings which gave rise to a Parliamentary Inquiry and to a range of recommendations currently under consideration by the Federal Government.
But there is a very large difference between what happened within NAB and what happened at the Commonwealth Bank. Quite simply, and as pointed out by the bank, the problems were identified, the culprits dealt with and the affected clients compensated. According NAB Wealth group executive, Andrew Hagger, the bank has paid out between $10 million and $15 million in compensation to 750 customers over the past five years.
The problem for NAB, it seems, is that it might not have appropriately breach-reported around 37 planners who either resigned or otherwise parted company with the bank. According to the Australian Securities and Investments Commission (ASIC) it is currently working through that situation with the bank.
On the face of it, the combination of the Commonwealth Bank’s problems with those of NAB provide plenty of fuel for those arguing for a Royal Commisison. But what should also be recognised is that the faulty advice delivered at NAB was delivered around a decade ago — well before the global financial crisis and well before the far-reaching changes which have been wrought on the financial planning industry in the wake of events such as the collapse of Storm Financial Limited.
Notwithstanding some of the less than adequate handling of events within Commonwealth Financial Planning it should also not be forgotten that most of the bad advice related to a culture which existed well before the GFC and that those responsible have long since left.
What the trenchant critics of the financial planning industry and proponents of a Royal Commission consistently forget is that the industry and practices which existed in 2005 no longer exist in 2015. Even before the Future of Financial Advice (FOFA) changes the industry had moved to fee for service, conflicted remuneration was being eliminated and a push had been initiated for higher educational standards for planners.
Also worth considering is the fact that the former Labor Government’s FOFA legislation is being implemented largely unchanged and that those changes which have been implemented by the current Coalition Government are largely at the margin and with bipartisan support.
Given all of the above, is a Royal Commission into the financial planning industry warranted? Only in the minds of those who ignore the number of Parliamentary inquiries which have taken place and which are ongoing and who are determined to prosecute personal and sectional agendas.
Even as some sections of the media rake over the coals of the events which occurred at NAB, the industry is still implementing the recommendations flowing from parliamentary committee exercises and readying itself to deal with the changes which will flow from a Parliamentary Joint Committee chaired by none other than the man who led the disallowance motion against the Government’s FOFA changes, NSW Labor Senator, Sam Dastayari.
No one in the financial planning industry should ignore the lessons of the past decade. They should not ignore the fact that bad things happened and consumers were hurt. But nor should the industry’s critics ignore the substantial changes which have occurred and those which are on-going.
Mike Taylor
Managing Editor
