In March 2017, ASIC warned it will take action against the licensees if they do not start making efforts to prevent rogue advisers from circling the industry.
Speaking to the parliamentary joint committee on corporations and financial services on Friday, ASIC deputy chairman Peter Kell said the regulator is also conducting a surveillance of seemingly easy-to-join dealer groups.
“There is a bit of an issue around some licensees being perceived as ‘licensees of last resort’, where you go if you left other places,” Mr Kell said.
“I can assure you that is very centre for us.”
Mr Kell declined to name the groups of last resort, but made it clear the issue of poor reference-checking exists across the industry, and not just at major institutions.
He also reiterated calls for more powers to ban those supervising financial advisers.
“We have, as part of our enforcement review, also sought some additional powers. The power to ban senior managers and executives is not nearly as straightforward for us as banning the frontline advisers,” he said.
“Yet, sometimes, these are the people who are actually driving the bus.”
ifa reported in September last year that the Australian Bankers’ Association had created a new protocol intended to encourage banks to check references and share information on bad apple advisers.
Earlier this month, former ASFA chief executive Pauline Vamos questioned whether the new adviser reference-checking protocol is likely to control the spread of dodgy advice, saying some firms will still hire financial advisers even if they are under investigation.
Clarification: A previous version of this article made reference to a previous article involving Infocus Wealth Management. The reference has subsequently been removed to clarify that it was not ifa’s intention to in any way infer that Infocus was a “dealer group of last resort”.
These people blaming Neo for Hutchinsons behaviour are idiots. It wasn’t Neos fault he was a rogue and I’m sure their research would of been adequate. I too am very confident that every single adviser has clients they are overcharging or have sold an overpriced “fee for service” contract to not to mention a multi thousand templates SOA. So to all you Dudley do right doubters out there you better smarten your act up and sweep out your rubbish before throwing stones.
Ill answer in order of your comments
1. yes it was
2. no they don’t
3. Stones can be thrown as everyone in the world knows NEO don’t do adequate checks
And about time too! Everyone knows where the smoking guns are, everyone except ASIC that is! Having worked in a bank licence, my view always was, and still is that the majority of bank planners are good, the product push came from poor culture driven by self serving executives who never have to talk to a client, and yes , you know who you are! Anyone remember 10-5-2 and MUP?
You hit the nail on the head Bigman. I managed a book of 200 mass affluent OGS clients, and I was getting daily calls from my manager demanding to know when I would write new business! So glad I left!
I once worked with a Rogue adviser.. All he was interested in was kickbacks, commissions and back hand payments from fund managers and insurance companies..and also charging his clients ridiculous fees for no or very little service, .thankfully he gave up being a financial adviser and went back to his original job..Dealer group head..
Anonymous – some one will be in contact in due course, thanks again..
I once belonged to a group that wound up with a rogue adviser. The individual was well known to the management team, highly educated, well respected and the appropriate checks had made made.The ASIC investigation into the individual took at least a couple of years to mount so the issues only came to light after he had joined the group. Once action was eventually taken the group was put through the wringer with surveillance, surveys and a series of mystery shoppers. As a result of the scrutiny the dealer group revamped all of it’s processes to ensure future advice was “squeaky clean”. Was it the dealer group’s fault? The previous dealer group? ASIC knowing but not providing the heads up? The whole process? I’ll let you come to your own conclusion.
Mark Woods – I would be interested to see what you implemented in your licensee to ensure there are no grey areas with BID because there seems to be an attitude of “interpret the law to the best of your ability but watch out if you get it wrong” on the ASIC side of the fence and the regulator provides no “clear, concise or effective” answers or examples on what is expected here!
Anonymous – You hit the nail on the head! I used to be a Financial Wisdom adviser and we were point blank told “Sell CBA products otherwise there is no future here for you” and those annoying practice development managers would be in your face every two months asking how we can better increase their “brand equity” by selling more and more CBA aligned products. Senior management, specifically those who train these advisers and put them on the front line, are just as guilty of BID breaches as the advisers are, even more so. And to point the finger at the adviser and say “it’s their fault they’re the bad apples” and hide behind a tree whilst the poor adviser has to deal with the s#!t storm is disgraceful and they should be held just as accountable as well as the licensee!
Edward, I would be more than happy if you wish to make contact via NEO head office.
The experience you describe at Fin Wis is one of the worst aspects of old style financial planning in Australia that is yet to be resolved. Personally I’m not too concerned if CBA wants to push CBA product via CBA branded financial planners. It’s what the client would expect. But the branding of dealer groups like Financial Wisdom, Count, Magnitude, Securitor, RI Advice, Shadforths, Bridges, Charter, Hillross etc all mislead consumers into thinking they are not aligned with a product institution when they actually are. This is extremely deceptive on so many levels. It is a mystery why ASIC, the media and politicians spend so much time lobbying on relatively minor issues in financial planning, yet completely ignore this widespread practice of consumer deception.
I suggest it is incorrect to generalise that the public is mislead as potential customers are advised who the parent company is orally and using specific disclosure documentation which by law must be provided. You are clearly ill informed anonymous
“Provided” yes, but usually with very low prominence, buried amongst a mountain of other stuff where the client is less likely to notice it, while at the same time prominently positioning an alternative “independent sounding” brand. Disclosure and deception are not mutually exclusive, particularly when one party (the client) does not have as good a knowledge of the workings of a complex system.
Clearly if you cannot fine or ban the “guy driving the bus” or Senior management then ASIC is 1) broken and 2) unfairly punishes an entire industry by tarnishing all participants 3) misses the mark completely. So no amount of education, higher standards, increased legislation is going to improve the situation if the perpetrators of the crime get off scott free. It’s about time we redirect the spotlight away from advisers onto dealer groups and senior management.
I wonder how those poor advisers who purchased equity in NEO feel right now….
Peter, NEO advisers are in a great position, if you know so much why not call a NEO adviser instead of spruiking your rubbish. Mr Hutchinson was given a glowing compliance report from the previous licensee, we still however had Mr Hutchinson on vetting for most of his time with NEO, there are no skeletons in our closet, we have no issue with the EU, as we have complied and implemented 99% of the recommendations, we have re-engineered our business, and we praise ASIC and their approach they have indeed assisted us to create a robust licensee. We now know exactly what ASIC expect, which makes our advisers exceptionally happy as there is no grey area with Best Interests. Alas what we do see is the majority of licensees who are missing the mark hugely, and we feel sad for those who are yet to find this out.