Appearing before a routine scheduled public hearing on “gatekeepers and expectation gaps in Australia’s financial system” at the New South Wales State Library, ASIC deputy chairman Peter Kell said the Senate inquiry will justify the Future of Financial Advice (FOFA) reform agenda.
“The media is right to shine a light on the conduct five years ago of CFP because it reminds the public how far we have come in changing financial planning,” Mr Kell said.
“As this committee knows more than most, there is major law reform underway for the financial planning industry, largely in response to major mis-selling episodes.
“Conflicts of interest, arising from commission-based payments, were at the heart of the problems with CFP. The Future of Financial Advice reforms, which start in a few weeks, include a prohibition against commissions going forward and there will be a new duty to act in the client’s best interest.”
More broadly, the deputy chairman said “ASIC welcomes the inquiry and looks forward to the opportunity of providing the inquiry with substantial information on what we do, what we have achieved and what we seek to achieve”.
Look at AMPs result today, taking more Financial Planners out of the Industry will make things alot worse, resulting in Jobs loses, think about how many jobs we create doing what we do, yet we are critised constantly and made out to be devils, greedy, dishonest un ethical etc……. you name it the communiists have called us it.
Conflicted remuneration and “soft targets” for recognition purposes is indeed at the heart of the issue.
However, why is it that the Financial Planning industry is the only one under question?
Our local medical practioners are remunerated based on how many patients they can squeeze through the door on per 15min basis and dentist are paid based on how many dental “problems” they can persuade the client to fix. Why are these occupations not been targetted for practicing unethically as well? Aren’t people’s lives more important than money?
And does more red tape lead to more ethical practices? I don’t think so. Businesses still need to be profitable and as a result – vertical intergration. Money needs to be to be made somewhere and this will just lead to getting around disclosure requirements on a retail level. We are going backwards as an industry.
what do we do ?
lay low what for the hurricane to pass
then walk outside and see whats left of our businesses ?
its becoming very hard and i would say i am one of the younger business owners in the industry. i really feel for those who have been in it and their business is their retirement package and its almost impossible to start from scratch now like most of us did a while back. What will become of us ? I know people are trying to stay positive however you really cant ignore whats been put in front of us now
The government and ASIC have already failed with FOFA. They have designed a new system that goes back to the Agency arrangement between Life agents and Life companies. It is morally impossible to have Industry fund and banked owned advice distribution AND require advisers to act in the Best Interests of clients. Government has effectively carved out a hugh chunk in Best Interests effectively saying the consumer should expect brand bias. WRONG WRONG WRONG. Vertical integration fundamentally works in the BEST Interest of the Industry fund or institution. Not the client, ASIC is now saying we have fixed it all with FOFA. Granted the government has potentially fixed some aspects but sadly in doing so has guaranteed Failure by Design with other aspects.
yes bring on a new government.
This government seems to say they are progressive blah blah blah…………
They hinder small business, almost destroy them.
Do deals with big business for Unions membership, especially with Banks.
They are just Bad and are full of Bad Bad people, with Bad Bad policy. Asic only acts on what these bad people tell them to do in canberra
So does anyone think that in the future people who can not be rewarded by volume will not be rewarded by profitability or a another measure say a performance review which recognises the financial performance of the business? Will that not exist in any business in the world. Perhaps somehow the need is to concentrate on getting rid of the bad apples who will always exist where there is money…… I don’t know how but I know enforcement is a significant part of it and to say commission etc will get rid of bad apples is crazy. They will just find another way. Another enquiry another waste of our tax payer Dollars…. Bring on a new government.
CBA’s ownership of CFS is at the very core of an industry wide problem. You can’t have it both ways – either make product, or advise product. Not both. It’s the same with Woolies and Coles now flogging us all home brand (full of extra heathly salt & sugar) – why? and who enabled them? The difference with CBA is that they just happened to have managers that had more arrogance, ego, selfishness, pure greed and dare I say it – stupidity? than all the other manufacturers owned Licensees…
i sit down at not and ponder what this business of mine that i have built over 17 years will become, alot of long nights, alot of great relationships with clients. And now with all this new regulation and paperwork i came up with the conclusion im neing forced to possibly merge with another practice for economies of scale and align with a institution because thats what asic and government want. Then you see stories like this…. is any one a little confused and maybe these morons in canberra and asic have never sat in a proper practice before ?
Yes Peter Kell, it’s entirely the crooked planners and conflicted remuneration to blame – pickon the ‘soft targets’, nevermind who put the structure in place and who enforced it using methods of threatening dismissal for those that refused to play their ‘game’.. Meanwhile, 7 ex-Commonwealth Financial Planning managers setup shop elsewhere to do it all again. Not only that, they are actively promoting their new businesses with no conscience whatsoever.
More regulation is not the answer. The Regulator has not been doing their job. They should be held to account for their failure by our Politicians instead of “dressing up regulation as reform”.
Clients again finish up the loser with higher costs.
Peter Kell still doesn’t get it. Commissions have absolutely nothing, I repeat nothing to do with CFP’s problems. CFP abolished commissions and shifted to fee for service/ wholesale platforms in 2004. Relentless push for FUM flow into their CFS manufacturing arm is the sole reason for CFP’s self-destruction. ASIC again is protecting their backsides. Vertical integration is rotting the industry to the core.
That is all well and good but the same problem still exists – financial planners in the majority of vertically integrated organisations are in a lot cases still remunerated to sell product and not provide advice.
While FOFA will hopefully improve the level and quality of information provided to clients about their relationship with their financial adviser, there needs to be a total ban on remuneration benefits being linked to sales volumes when it comes to financial planners selling financial products.
Until we see a clear and public delineation in remuneration structures between financial planners who are remunerated to sell financial products and financial planners who are remunerated to provide advice then the CBA problem can and will repeat itself.
That’s right…..divert attention away from your failings and focus on the extra red tape you push onto the remaining good advisers. Paying someone a big safe salary to do an ordinary job could be called conflicted remuneration also.
How hard is to renew a business name these days…sheesh.