The report, by committee member and Tasmanian Liberal senator David Bushby, is part of the Senate’s final report into the performance of ASIC in investigating a string of advice failures at CBA dealer group Commonwealth Financial Planning.
As part of the report’s 61 recommendations, the committee recommended a royal commission be held to inquire into the behaviour of financial planners at Commonweath Financial Planning as well as ASIC’s handling of the matter
Mr Bushby that while “there is no doubt that there was a failure of governance when it came to the operations of certain advisers” at CBA, a royal commission into the scandal is unnecessary.
“A Royal Commission is primarily intended to undertake a fact-finding mission, however, the issues proposed to be examined here have already been extensively reviewed – including by ASIC, the CBA, the police and the committee,” Mr Bushby said.
“Although a Royal Commission might recommend improved practices, existing institutions have already been at work exploring and driving wide scale reform in the financial sector.”
Mr Bushby said that ASIC’s investigation into CFPL predates changes made under the FOFA reforms “which have imposed strong obligations on advisers to prioritise their client’s interests over their own and to act in their clients’ best interests”.
He also argued that ASIC’s intervention has “greatly transformed” the culture of CFPL and provided significant compensation to those affected by poor advice.
“Given these circumstances, and given that the law has changed and will possibly change again following the Financial System Inquiry (FSI), a Royal Commission or any other inquiry will incur significant cost to taxpayers without delivering any greater level of understanding or financial restitution,” Mr Bushby said.
“A fresh review of files and individual cases could protract the emotional strains on victims of malpractice over a longer time period, without the advantage of offering additional remedies beyond those that are already being worked through.”
So much time and money wasted on FOFA. NO excusing the blatant abuse of trust too.
If you had previously regulated at a Prospectus/PDS level and imposed commission/fee ceilings (eg 4%) then corrupt advisers wouldn’t to place clients into products/options for greater rewards.
The majority of advisers always act in the best interests of clients and have been disclosing fees/commisions/mers to clients for over a decade.
We just seem to be going over the same issues repeatedly. The industry has allowed unions, industry funds etc to dictate for far too long. It’s time to stand up guys!!!!!
After 30+ years in the industry, we are getting bogged down by all the red tape. We NEED to keep all this simple. It has nothing to do with commissions. Clients agree to fees/costs. As long as they are clearly understood there should not be an issue.
When was the last time you asked Coles/Woolies how much profit they made on a shelfed item?
Sen Bushby is correct as the report itself is a stinging indictment of the lack of action by the Commonwealth Bank to fully and without equivocation compensate all of those clients involved. This referral would best be suited to the current financial services enquiry.
Every time one of these events occurs, it is seen as a failure of advice, where it is the product that is the cause of the failure. The Commonwealth Bank financial planners were selling a product for which they were well rewarded by the bank. If ASIC concentrated on controlling product as well is advice then there would be less failure, but ASIC have not yet connected up the dots. We wait and see if the regulator can do this after the stinging criticism of it over the past month.