In a letter to members, Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston said the financial advice profession should be able to function with minimal interference from government, resolving their own issues and seeking outside assistance only when deemed necessary.
“It is time for the financial advice industry to be treated in the same manner as the legal and accounting professions where minimal interference from Canberra bureaucrats or politicians is tolerated or desired,” Johnston said.
“Internal issues are normally quietly resolved or, where necessary, the courts get involved to decide the outcome without a politician or bureaucrat in sight.
“Financial advisers should be permitted to use their professional judgement when dealing with clients and Canberra bureaucrats should be held to account for their professional judgement when dealing with our industry.”
On 2 April, the Compensation Scheme of Last Resort (CSLR) officially launched, putting advisers out of pocket almost $1,200. Johnston said with the CSLR now in place, the Australian Securities and Investments Commission (ASIC) can focus on reducing misconduct in banks and super funds.
“With the CSLR now activated and the consumer-friendly Australian Financial Complaints Authority (AFCA) effectively overseeing the advice industry from an advice quality perspective, ASIC can then turn their attention onto the product manufacturer/institutional space where most of the problems over the past 40 years have occurred for consumers,” he said.
Highlighting the impact institutions’ poor behaviour has on the financial services industry, Johnston said advisers are often left copping the blame for wrongdoings as institutions buy their safety through political donations.
“You only need to look at the AFCA annual report where over 95 per cent of consumer complaints are against the institutions and they are 100 per cent responsible for the $40 billion of failed funds over the past 30 years,” he said.
“Institutions are continually avoiding accountability over their conduct by spinning the blame onto the financial advice community and making large donations to political parties to mitigate negative outcomes.
“Like most times when Canberra gets involved with policy outcomes, it is a poorly managed process and the taxpayer is left with the cost.
Johnston added that politicians often continue to work in government longer as they wait to secure alternative employment due to the lack of a pension, potentially causing more harm than good.
“The calibre of politician has markedly diminished over the past 20 years since the parliamentary pension fund was abolished (October 9th 2004) and all political parties have had difficulty recruiting the best minds into seats,” he said.
“This is a critical issue facing Australia’s democracy going forward.
“Around 10 per cent of politicians are currently in the old pension scheme, the rest are on the dole if unseated. Morrison was a classic example of no pension and a Sydney lifestyle to maintain, he could not give up his seat until an offshore job emerged.”
The first step would be to become self-licensed. Something I’ve learned is that the more complexity the more dealer groups can charge advisers.
The recent requirement to be registered is a classic example. Now let’s remember, we are already licensed with ASIC, we’ve paid for ASIC register and we’re authorized. At a recent ASIC webinar explaining the move, numerous compliance heads sit there, all in silence. No one said anything, no one was game to oppose it or even question this additional red tape. No one questioned the cost commencing from 2025 and Major Dealer Groups sat there and all said yes. Advisers think there are people standing up for them yet there in a silo.
[quote=Degree = credibility]100% agree… if only all advisers held the same standard of professional qualifications as accountants.[/quote]
Hilarious!
Can’t tell you how many times I’ve had to fix mistakes made by Accountants in areas they should be proficient at – Don’t get me started about area’s they encroached on “hot mess” would be an understatement.
Exactly – look at all the SMSFs which get set up to provide accountants with nice income streams.
“Like most times when Canberra gets involved with policy outcomes….”
Peter,
Agree with your comments, & applaud your ongoing efforts, but can you, & others, stop referring to ”Canberra”. You’re vilifying a city of 478,000 people the vast majority of whom have nothing to do with government & bureaucracy.
Any suggestions… Muppets, Bludgers, Pigswill (thanks, Mr Keating), Union-lackeys, Parasites, etc.,
I endorse and this is evidenced by my PhD research in 2018, what Peter Johnston of the Association of Independently Owned Financial Professionals (AIOFP) says.
It is the AFSLs that are more to blame for the sins of the past than the authorised representatives.
It is time the ARs operate in the same way as other professions.
Thank you for articulating my whinge.
100% agree… if only all advisers held the same standard of professional qualifications as accountants.
Most have much more.
Not according to adviser ratings. At least 50% of the advisers DO NOT have professional qualifications.
Many accountants only have a diploma qualification so your comment is not entirely true. Many accountants were also ARs and invested their clients money into failed tax effective investments and received large commissions. Many accountants have a lot to answer for the carnage they caused so your comment is meaningless. In fact I am certain if the analysis was done it would show that a majority of client losses involved an accountant either giving the advice as an AR or receiving a cut of a client fee or commission from an AR. I can go on if you want. I have seen it all.
Rubbish, just not fasea, like all accountants
Accountants should thank their lucky stars that they were not held accountable for client losses in the same way that financial advisers have been blamed, demonised and destroyed. Most of the losses suffered by clients are due to financial product failures. A financial product with an AFSL was subject to a financial audit each year. Why were the accounting firms who carried out the annual audits not held accountable. Accountants should remain quiet and and be grateful that they have not been a target like financial advisers have. The majority of the problems were from product failure not financial advisers.
…and the very reason many accountants handed back their limited licences was due to their being included in the increased compliance and Asic Funding Levy…
No doubt they looked at themselves and thought “…if all the other accountants (who were masquerading as Financial Advisers) know as much as we do these costs are headed in one direction only!
Very well said and entirely true in all regards.
Totally agree with Peter. My suggestion to Peter is to run an anonymous poll and send it to all advisers and collate the results and they use this to influence the government. I am sure if 10K adviser respond (a likely outcome if they are asked what they think of ASIC fees and CSLR), ASIC and the government will be pressured.
Or do what both industry funds and government do, have the poll conducted by a related party or pay for questions to be consciously bias through market research then claim independent studies agree