In an opinion article published in The Australian today, ASIC deputy chairman Peter Kell said the corporate regulator says financial services organisations now need to develop a deep culture of compliance – something, he says, that must be led by senior management.
“A compliance culture must be driven from the top down. A compliance system that is simply treated as an add-on required by law ultimately will be useless,” Mr Kell said.
“An effective compliance system must be sustainable and built into and integral to an organisation’s business model. Having a folder full of policies and procedures is just mere window dressing if they are not lived and breathed and not policed for effectiveness.”
Mr Kell said the ultimate yardstick of a sound compliance culture was the “quality of advice” offered by a practitioner or firm, stating that ASIC will be holding executives to account for insufficient advice given to their staff.
“If non-compliance is tolerated, even implicitly, it is a strong sign the culture is weak,” he said.
However, while maintaining that the regulator intends to act on the “enhanced enforcement powers” awarded to it by FOFA, the deputy chairman also indicated some sympathy for advice firms as they face the task of becoming compliant.
“We recognise some reforms will force organisations to do major work so that IT systems and adviser training are in place,” he said. “So, for the first 12 months, ASIC will take a facilitative approach to inadvertent breaches and look favourably on those making a reasonable effort to comply.”
Stevejj,
I don’t know many/any that come to the industry thinking that, except maybe the comm chase in the big instos.
Anyone who has built/is building a non insto FP business has typically worked more not less and I personally have never been under the misapprehension that it was not a long hard slog to build any kind of business asset. That’s why a good business in any industry is highly profitable, only a few make it, the rest die a business death.
When I talk to the professionals in this business everyone will think this way. Not sure where these quick hit guys are that you refer to? I’ve never met them, perhaps they already left when they realised the fallacy of what you articulate?
[quote name=”Wildcat”]Stevejj,
These people typically take much greater personal risks, borrow against their home, employ other Australians.
[/quote]
Wildcat – 100% agree. The point I was making is that a new FP going into the business should be thinking about building their client base and excelling in their profession (which most do) and not going into this as a way to build a business to retire on by selling the book.
If they are successful then they will build value in the business.
Many small business people take risks, borrow against their home and employee others – but their primary motive is to earn a great income / be their own boss / work less hours / work hours around their other life styles etc.
I think far too many FP get into this business being sold the dream of 5/10 years work and then retire on the proceeds – if only life were so easy.
Asic should be focusing on all the flaws of Fofa even advising Govt to scrap it and start again
Stevejj,
i dont see your point either, i find it hard to believe you have had your own busineess for 10years and dont put a value on it at all. Are you a charity ?
Stevejj, there is nothing wrong with the idea of building a business with a view to selling to fund retirement.
These people typically take much greater personal risks, borrow against their home, employ other Australians.
Any business person deserves a bit more, they certainly put alot more in than an average employee, they deserve more back, whether an FP or otherwise.
We have many very wealthy clients that made their money by selling a business in a multitude of different industries.
Anything else is really communism, what is your point??? You make no sense at all.
Jason – I have been running a successful business for nearly 10 years now. I see regulation as helping me stay in business as it raises the bar for new entrants.
I have never worked in a bank, I would not be suited to the culture.
Why would being in FP be making your retirement. Everyone else does this from saving their hard earned $ and investing, sometimes with the help of a FP.
If you have fallen for the hype of becoming a FP to build a next egg, then you have been duped. Building a business is a lot more than being a FP, now that trailing commissions are going the way of the dodo.
Many FP are similar to being a plumber – you learn your trade / skills and make a living. Very few make successful business that will keep them in retirement.
I fear that the days of selling ‘the book’ and making a killing may fast be disappearing.
Steve
you obviously havent run a business, ive also worked in a bank and that maybe suitable for yourself however the point majority of us are making is these businesses are our retirement and certain politicians have almost destroyed them for their gain, not yours, not clients
Steve – jj, the big difference is that the ones complaining are NOT from the big banks, they have integrity and care about their clients. They are not motivated by “salary bonuses” which equate to sales commissions as they still exist in these institutions. I WILL leave the industry before sinking to those levels. There are still good guys in the banks (some of them) its just the environment and product flog mentality that is distasteful.
I have already emailed our dealer saying we will likely be non compliant under FOFA by July 31.
We have $5M or more in cheques sitting our desk at the moment, THAT is our priority and always will be.
The FDS crap will be done but not before we actually look after our clients.
Shorten is just looking after his mates in the traditional Labor way, nothing changes.
Sam and others – being a FP is a method of making a living – no different to a tradie or a real estate agent.
If FP is such a bad place to be then why not get your real estate license and become one – the grass may not be greener after all.
A hundred years ago there were farriers on every corner of small towns – life changed and they found other work. If FP is becoming like this then go find other work.
The IFA posts recently are all about FP complaining about how hard life is and how unfair the regulations are – get used to it.
You can always go and work for one of the banks and then your problems are gone. After all working a 40 hour week, benefits, holiday time, sick time, share options etc etc – how good can it get.
Real estate agents in WA charge between 8.5% and 12% of income as the management fee with just a contract at the beginning. Tenant pays the fees. In commercial property tenant pays all outgoings as well. Did I miss something? oh yeah there is no FDS. Why don’t hey introduce a rule that the landlord can opt out of paying management fees to the agent every year, do you think that will get up…not a chance.
i feel like i have to hold a badge up to client first and say ” Just wait before we talk i am going to charge you $$$$$$$$ and you will receive letters from me stating i will be making $$$$$$$$ and you will lose you money, then you can complain to FOS where it will cost me 10k to defend and you more than likely to win, even though this 100 page document i have to go through doesnt defend me”. Seriously this industry has gone mad. You would have to have rocks in your head to buy a business now
seriously if anyone thinks otherwise than FOFA was designed to slow Planners up then they must be living in a totally different world to Billshorten Movement and most planners. This stuff has taken my office ages, held us up from doing our standard reviews, seeing new clients, spending time on education. This is just absolute shite. I hope people see Kevin Rudd in the exact light as they have seen Tom waterhouse, he is everywhere sprooking what people want. Well i tell ya Kev,you have no idea what i want nor my clients.
Kevin reckons he is going to help businesses do business
Start with FOFA, Kev. By referring to “culture”(?), ASIC are being deliberately obtuse-leaves the interpretation up to ASIC, as usual.
This is the same ASIC who apparently believes that vertical integration is the answer to controlling advisers, not the reason advisers need controlling in a sales “culture”.
ASIC also thinks direct sales of risk products on the internet is NOT in breach of “best interests”
Here is a test for ASIC-ring a few tradies wives ( those who organize the purchase of the tradies income protection ) and see if they understand the differences between personal and general advice
London to a brick on they do not get the subtlety, or to quote Toothy Tom, 85cents
Mark,
you are correct i realised that after i wrote it. haha. Finally finished my 40 FDS for the month and have booked 20 clients in. Hope i make the month.
Peter, I think if you moved those 5 metres to the “left” they would probably leave us alone.
Does anyine else feel we are being treated like criminals with a metal band sonar around our ankle if we walk 5metres left or right we will alarm a bell and go straight to jail ? While the union dominated funds have been let off scott free. Look at Hesta last week blatently refuse to help a terminally ill lady with cancer, if that was us, we would have a camera crew in our office, asic on to us, our delaer group booting us out cold, even if we were innocent.
I think ASIC has played the big bully long enough. Its one thing to get tough on the Industry as a whole and quite another to cast a wide, over-bearing net. With revenues fading fast there are not going to be many executives left to pass on the urgent call to ‘deep compliance’ and its unrelenting process. Its well known the current governments knee jerk reaction to a few bad apples culminated into a covert class war against financial services. Of course ASIC must pipe the tunes its paid to play, why else would a watch dog turn on its own people? I’m confused as to whether the ragtag group of trade unionists temporarily running the show have any historical background in the financial industry. The culture that created ASIC is the culture that will sustain it.