Speaking at ASFA’s ‘Advice within super’ conference yesterday, ASIC deputy chairman Peter Kell said there is a “gap” in the regulator’s toolkit relating to its ability to take action against advice business managers, conceding this “hasn’t been a major part of [ASIC’s] work”.
“On several occasions we have had some blunt discussions with [firms] about some of their managers and executives that have been involved in [poor behaviour] but there hasn’t been a lot,” Mr Kell said.
Mr Kell listed ASIC’s action on non-aligned Western Australian dealer group WealthSure as one example of the regulator taking “direct action” against senior executives, but said ASIC requires the powers to “do it more easily”.
“We have made an argument that it would be much better and much more cost-effective for us to have more direct powers, like they have in the UK, to take banning action and other relevant actions against executives [and] managers,” he said.
Mr Kell pointed out that reforms proposed by the Financial System Inquiry would also allow for the regulator to have greater powers to focus on the executives of financial services companies rather than individuals on the “frontline”.
“[These reforms will give] ASIC greater powers to take action to ban managers and executives of financial advice firms not just the frontline advisers, but the people who are responsible for training, compliance systems, the remuneration and what-not that often drive the culture of the firms,” he said.
Halleleuha. About time. Investigate the people who set the sales targets and increase them at regular intervals, and then sit back and see their salaries rise at alarming rates and their cash bonuses roll in, while the bunnies who feed the product to their clients cop the flak. Start at the CBA and see what the head of wealth management or financial planning gets there. I think last year it was $3 million for whipping up her sales team into a frenzy of misspelling CBA products.
The advisers have been hung out to dry by the product providers. They have deserted their own employees and spat on the IFA.
Until providers cease advice this corruption of our industry will continue.
Interesting to hear that ASIC intends going after executives of poorly managed financial planning businesses. What would be more interesting to know is what our professional bodies such as the FPA intend doing, or are they going to remain silent on enforcing ethical standards and just keep collecting membership fees. The only reason for mentioning FPA is that I am aware that many of the executives of the bank FP ops were also CFPs. In short, we need to show ASIC, the media and consumers that we are hard on our own, no matter how senior they are, for not meeting our agreed ethical standards. Thus, re-building trust in our professional, especially as we are helping millions of Australians to achieve their financial goals.
Simple, all people involved directly or indirectly in the delivery of advice to clients must be Authorised Reps and subject to the same “best interests duty” as the frontline advisers. If then banned as AR’s this would get them out of the industry, albeit sometimes only temporarily.
spot on Grant. Ive seen three of the big four from the inside and its a top down model where advisers get told what they have to do then get thrown to the wolves when it turns to S@#t. This is becoming increasingly evident when you have comments from MLCs head Andrew Haggar calling for advisers to lift their game while knowing full well it was the management direction and business culture that is the biggest driver of behavior. Buck passing to soft targets while they/management move on hoping no one notices. Peter Kell admits that even if they do notice ASIC does nothing anyway.
I will believe it when i see it. all very good to have banning orders but what about fines and jail time.
In effect Peter Kell is conceding that 2 sets of rules should apply: retrospective advice punishments for ‘soft target’ advisers but nothing for managers and execs. until FSI is implemented. No surprises here.
Eventually the penny will drop that you cannot have product and advice in the same organisation because the inherent conflict is too much. Advisers have borne the brunt of the blame so far because ASIC and others haven’t bothered to think about this any more deeply. Let’s hope that’s changing.