In a YouTube video uploaded this morning, ASIC deputy chairman Peter Kell spoke directly to the Australian public about the Commonwealth Financial Planning scandal, pre-empting an ABC TV report scheduled to air this evening.
“Tonight the ABC Four Corners is doing a story on Commonwealth Financial Planning, or CFP, and the conduct of that company’s financial planners six years ago,” Mr Kell said.
“I wanted to tell you what ASIC has done about CFP and the financial planning industry more generally; what CFP did six years ago was simply unacceptable.
“Commonwealth financial planners were giving very poor advice to clients, driven by conflicted commission payments. This was part of a wider problem of unacceptable standards and conflicts of interest right across the financial planning industry that ASIC publicly identified.”
Mr Kell explained that the “severity” of the inappropriate advice provided by some Commonwealth FP advisers led the corporate regulator to take enforcement action, and also took the opportunity to highlight enforcement actions more broadly “against many individuals and firms, large and small”.
The regulator also reiterated calls for “law reforms” that would allow ASIC to take “enforcement action against the executives and managers in the financial planning industry that have done the wrong thing”.
Mr Kell also listed the “three areas” where ASIC “could have done better with CFP”, admitting that “ASIC should have acted faster”, that “ASIC should have been more transparent at the time about the action we were already taking against CFP” and should have “communicated better with the whistleblowers”.
The FPA also issued a statement this morning ahead of the scheduled Four Corners report, explaining that a subject of the report, former Financial Wisdom (CBA) authorised representative Rollo Sherriff was previously expelled from the association’s membership.
“It is on the record that the Financial Planning Association of Australia took disciplinary action against Mr Sherriff as early as 2004. Mr Sherriff’s membership to the FPA was suspended a decade ago,” the statement said.
“In addition to this disciplinary action, Mr Sherriff was terminated as a member of the FPA well over four years ago. Mr Sherriff is listed on the FPA’s consumer website as a banned member in accordance with section 16.1 of the FPA professional constitution.”
David NoFurries to answer your question in one word
“Photographs”
What a load of rubbish, I have uncovered scams that ASIC and Peter Kell himself will NOT take action. If the CBA FP were an individual or small dealer group then ASIC would be suspending if not banning AFSLs for life. IMO if ASIC want to step up and do something positive and constructive suspend all CBA FP licensees until CBA come clean with the truth and compensate investors and then change the “systemic problems in the process” BEFORE the licences are reinstated, and after reinstatement they must remain on a period (5 years) of very close supervision.,
But a experienced Financial Planner in charge of ASIC not failed solicitors that cant cut it in the real world.
When will ASIC admit that it doesn’t have the necessary skill, experience, desire or management expertise within its ranks to fulfill its statutory obligations, instead of the constant asking for more money and increased powers or just making excuses. We have the ACCC, APRA and ASIC and whatever else government agency starting with A, yet it is always ASIC that is slow to move or can’t decide what to do. Australians deserve better.
ASIC it seems that you love pointing the finger at everyone else but when its pointed at you, you hide like little children and try to blame others. Look yourself in the mirror and take responsiblity and next time act quicker instead of sitting on your hands.Have you really acted on what you have stated?
What’s needs to be done is to promote the action of that CBA Financial Planner Jeff Morris, a CFP, who was the whistle blower who was prepared to firstly put the interest of his clients first and foremost and take on CBA. Rather then airing our dirty washing in the public, arguing about fees, conflicts of interest in the media here’s a classic good news story. it’s refreshing to see the work of that guy and if anything Jeff Morris actions need to be the front page news. That guy needs to be Planner of the year in my books.
ASIC May be full of geese but nothing compared to the execs that let this happen at cfp. Sorry “commonwealth fp”
ASIC is a joke. I’ve contact them in the past about firms which have subseqently taken investors money and they’ve there attitude is we’ll add it to the list. Police don’t need more tasers what’s needed is more Police. We don’t need more regulation just more enforcement. Don’t know why ASIC don’t work with groups like AFA and FPA to promote self regulation.
Classic example of not working with the industry is his use of CFP. I pay good money to be a CFP -certified financial planner and not only does the FPA spend considerable time and energy promoting the trade marked name so do it’s members. High time legal action is taken out by the FPA on inappropriate use of the CFP term by this head goose.
There is still the issue of ASICs response to whistle blowers. In a word-its rubbish !!
Every risk adviser can point to advisers who engage in practices which are unethical. Every life office knows who they are, but probably less than 50 advisers would fall into that cohort
ASIC will not take seriously complaints from advisers about the unethical practices of other advisers. ASIC says it must discount those complants because they may have resulted from “competition” where the complaining adviser lost the case Refer STORM
Regulators in general want the client to make the complaint, but that only happens in rare cases with insurance because the client is usually unaware of what’s happened and may never know, unless there is a claims complaint.
The sad truth is many risk advisers have lodged complaints but never even received an acknowledgement.
ASIC IS TOO SECRETIVE
ASIC has failed us, yet again. Sellers of product are NOT providers of advice. Unless this differentiation is made, conflicts of interest will exist.
So, have we all seen the 4 corners report last night and read Saturdays SMH. Slinging only hurts the industry. ACTIONS speak louder than words. Hopefully the regulator, senate enquiry or someone with tackle investigates and cleans up so we can all move on. Do it right the first time or is that just too hard due to the size of the issue and the players.
Someone seriously needs to start a Licensee for the consumers as their Value Proposition and here’s the slogan, “We CAN’T, work for our own interests! We work for you! We CAN’T!”
ASIC… not good enough! Need to be able to trust the watchdog to do its job or what are we paying them for?
Well Peter why not apply the same standards that you apply to small dealer groups ? Pull the CBA’s license or is it a case of to big to “Fail” or should I say act.
I am an AR of a large advice group which also sells products. Maybe I’ve been lucky but I have never felt pressure to sell particular products and have always been encouraged to act in the clients best interests.
Because of this, I have always assumed that those who sell product at any cost are the exception rather than the rule. However, these recent revelations are “the straw that broke the camels back” in my mind. Sheer weight of numbers shows the rogues are in fact the norm.
Solutions:
1. Ban product providers from giving “advice”. Force them to make up their minds about which side of the fence they sit;
2. Ban publicly listed companies from owning advice groups. The ultimate pressure to make quick profits comes from the need to meet shareholder expectations. Remove this pressure.
Of course, the vested interests will make sure this never happens and no government of any persuasion will have the balls to force it.
Worked for the CBA 6 years ago and good advise mattered little. I lasted 1 year. At the peak of the market in 2007 I was constantly told by direct management I should have been using more gearing and getting clients out of Term Deposits. Other advisers were put on pedestals for gearing in circumstances that made me shudder in the name of FUM. I too had to leave before they forced me into a position where I would have been lynched by clients just 6 months later. Way too higher price just to keep my job.
Why are the top people in ASIC still there? Mr Kell listed the three areas where ASIC could have done better with CFP and many others., admitting that ASIC should have acted faster, that ASIC should have been more transparent at the time about the action we were already taking against CFP and should have communicated better with the whistleblowers.Who believes that other banks product suppliers are also “protected” Next we will be told they are too big to let fail!Any smaller AFSL would have lost their licence.
Some issues stand out here for further attention. Action against management who did nothing and forced the whistle blower to go direct to ASIC. ASIC did nothing when informed or were they informed well after a clean up.Long standing sales culture above ethics, compliance etc- does it still exist or hidden under a new title. Maybe the real issues will come out and a culture be exposed instead of hiding certain practices and shooting the adviser as a cover, whether deserved or not. Sales and profit are the drivers here- not good practices.
Used to work at Comm FP 4 years ago. I smashed 9 out of 10 KPI’s on our scorecard (literally around 200% of expectations on each), the one KPI I missed was “FUM sales”, which I was 80% of target on. As a result, I (and everyone else in the business who missed their FUM KPI) was given an overall “underperforming” at end of year performace review. I quit straight away. My client feedback, revenue, compliance, everything was well in excess of expectations, but none of that mattered, it was FUM at all costs. Hopefully they’ve changed these days…?
“Mr Sherriffs membership to the FPA was suspended a decade ago, more questions than answers –
1. Disciplinary action by FPA in 2004 and yet CBA/Wisdom put him on a pedestal?
2. ASIC more re-active than pro-active?
3. Why doesn’t ASIC go after the execs at the top that were driving the bad culture at CBA?
Time to get rid off Banks holding AFSL’s, get rid of ASIC and create new independent regulatory body.
Good point shane, someone should take it up with asic. I note that the author has used the correct acronym Commonwealth FP, only kell uses the incorrect. must be some boiling blood over at the fpa
It should be pointed out that CFP is the wrong abbreviation of Commonwealth Financial Planning Limited.
Financial advisers blow the whistle and nothing happens…but oh dear, as soon as the media wants to run a story on it, they all of a sudden pay attention.