Speaking at a Centre for Independent Studies breakfast, Mr Costello said Australia’s regulators must take some responsibility for the behaviour uncovered by the royal commission.
“It’s all very well to say ‘oh well banks didn’t obey the law, they should be investigated and prosecuted’, but you gotta remember all the way through that banking is a very highly regulated industry in this country, very highly regulated – I know because I put a lot of that regulation in place,” he said.
“We had a corporate regulator all the way through here, and if you want to say that the banks were misbehaving, I want to ask where the corporate regulator was, and I hope by the time we get to the end of this royal commission, the commissioner asks that question as well.”
Mr Costello added that he was “not excusing bad behaviour” on the part of the banks, but that it’s important to ensure the country’s regulatory bodies “were on the job” during the instances of misconduct.
In addition to his remarks about regulatory effectiveness, Fairfax Media publications have reported that Mr Costello also cast doubt this week on the future of commissions paid to advisers.
“I think the reality is that commissions are going to be banned,” Mr Costello was reported to have said.
“These big financial houses are going to have to rethink their model … It may not be just that there have been some scandals. It may be that the whole model is now under pressure, and that’s what they are going to have to think about.”
ASIC’s big failure, is their priorities. They have wasted far too much time nitpicking the way we charge fees, the way we offer service etc. even though the vast majority of our clients value our service and are happy to pay for it. Meanwhile ASIC have done little to identify and prevent the ‘jaw-dropping’ events (as Hayne described them), where advisers, accountants, lawyers, product providers etc. blatantly steal client money or place them into dodgy investments. Preventing these occurrences should always have been ASIC’s no.1 aim. By strangling honest financial planners to death (and accountants for that matter), these jaw-dropping events will become far more common. I hope Costello is right and the RC turns their focus to ASIC, because that is exactly where the focus should be.
and that is exactly what they are doing now and the burden on honest financial planners is far too great that we have no other recourse but to pack up an leave.
many who are still practicing will face imminent death as the regulations become even more onerous than they are presently
how so you say, just wait what will happen to FP’s
i blame the greedy dealer groups most of all
Is Peter Costello an expert on just about everything or does Peter Costello believe he is an expert on everything ??
This is politics and nothing else…it is obvious the Costello machine is building momentum and re-engineering a profile for a future attack.
Peter Costello wouldn’t understand the first thing about the provision of quality Life Insurance advice and the benefit to the consumer of the adviser being paid via commission.
Secondly, he wouldn’t also realise that many clients who pay an inbuilt product commission to an adviser
are better off from a cost perspective than an alternative option.
Well done Peter.
If Costello wants to fix the problem he can get reelected, be voted by his party to replace Turnbull, and fix it. Oh wait, he was offered that already!
Financial advisers are being regulated out of existence. To do this job properly the red-tape burden makes financial advice uneconomical for most of the public. So the average mum & dad who need advice end up going to advisers that sound a lot simpler (unregulated advice).Then they end up with a SMSF, owning a geared property & another geared property in their own name. Most of these people are too embarrassed to complain or have no written advice at all. By the time they realise they were ripped off, most have thrown whatever ‘advice’ they received away.. This is the reality of most mums & dads looking to get ahead & the regulator has driven them down this path by making business impossible for genuine best interest at heart financial planners.
It is far easier for ASIC to threaten to gaol some individual planner in Hobart for not having an Authority to Proceed dated, then it is for them to confront the powerful forces of the Institutions and larger Dealer Groups. In fact, in the past, ASIC have apparently let the subject of their enforcement activity assist in drafting the media release that they issued on a compliance related matter.
1 x criminal prosecution in nearly 1 decade. the question was asked of the ASIC representative whether this was good enough. the answer was NO
does anything else need to be said ?
unless the greedy corporate criminals and degenerates are criminally prosecuted nothing will change.
they keep regulating financial planners we are already so heavily regulated to death
In 2009 I contacted ASIC about a Hong Kong based pyramid scheme being flogged. An individual was handing out flyers in his Tyre Shop in regional Australia. It went belly up costing investors Millions. Three other times I’ve also contacted ASIC about firms cold calling, scams etc etc and those funds also went belly up..again costing investors hundreds of thousands of dollars….Of course these were not a financial product and so they’re not within the law and ASIC scope. Yet under my old licensee with 300 advisers in it I was the one being punished if I failed to get the 3 separate forms to consent to paying ongoing advice fees. We’re being buried in red tape and compliance, and we’re pushing people onto these schemes and shoddy operators.
Yes the whole model needs changing. I’ve said for years the regulation framework (ie the law) is fundemently flawed. The regulation and laws should be first regulating “advice”. They are framed completely wrong, because the overarching framework is currently on “product”. Attempts have been made to regulate advice, but it is still from the wrong persepctive!
So true ASIC have been advised of misconduct by many advisers and do nothing it is all about the make believe KPI’s viz open and close a mater = 1 result with doing any investigation.
Thanks to the RC it is coming back to hopefully haunt ASIC -no more excuses do the investigations or get staff or contractors that can.
I know ASIC was advised of the action of the largest credit union failing to review clients who were paying for the service – so easy to prove just check orphan clients of advisers who had left – ASIC closed the matter because they wanted the clients names!!!!!!!! The credit union sold off its financial planning clients the new licencee who did not disclose the non compliance?
I think there is a hidden Costello agenda here. Despite denials, Kroger ( now controlling the Vic Libs) and Costello appeared to have joined forces again, to save the Coalition. The target is Ms O’Dwyer in Costello”s old seat. She apparently is considered a wet. Costello has twice attacked ASIC in a week. By inference the accusation is O’Dwyer let herself be snowed by ASIC, and now looks like a goose. I think the “Costello for Canberra ” campaign is still on-depends on how far Morrisons Budget sinks, and what extra dirt the RC finds.
I am not a large writer of risk insurance but I can assure that a lot of effort and energy is used to write any business especially if there is questionable health concerning the applicant. The spent with fact finding, researching and preparing a statement of advice would create a fee for service cost more that the applicant would be prepared to pay. Currently in place is penalty clawback if the policy discontinues with a specified period. If in the future there is ban on commissions then the effort versus reward is hardly worth it as is the case with the banning of commissions within corporate super. If this is the case, watch out for the increase in future social security payments. Costello should keep his opinions to himself. The industry is damaged and requires repair. Insurance companies should also take on the onus of the current problems we are currently facing. If there are steps to ban commissions they’d better make it universal including real estate and mortgages. I would be interest to see how our economy would cope. If there are no incentives, productivity will be stressed.
we will be pretty much like the legal profession where the fees are exorbitant even for the smallest of things and a service which only the wealthy can access
is this what we want?
While Costello may have introduced a lot of regulation, it was the wrong type of regulation. It was “drown everyone in disclosure” regulation. It just made everything more complex, time consuming, and expensive for advisers, consumers, and regulators alike. Labor then compounded this error with FDSs and Opt-In.
The best regulatory model involves a best interests duty, high minimum education standards, individual licensing, and a ban on vertical integration. Nothing else. These things are either here already or in the works. What is really needed now is to unwind Costello and Labor’s counterproductive “drown everyone in disclosure” regime.
you are right but no one is listening to you nor I.
Well said, Peter Costello! Also well said Peter Costello: http://www.heraldsun.com.au/blogs/andrew-bolt/costello-warns-years-of-debt/news-story/cf114213d32c000542c074d2b00eccf8. Thank you from middle income Australia. It is now time to call out the solution to taxation minimization using OECD listed tax havens by linking their use to the rate of GST. What say you Peter Costello?
Hear hear!!!
ASIC was told by financial planners about Storm and did nothing. ASIC were told about the activities within banks and AMP by financial planners and did nothing. ASIC are currently being told by financial planners about property spuikers within the SMSF space and accountants providing unlicensed advice and they are doing nothing. ASIC are being told by financial planners about the misuse of general advice and blatant breaches of the sole purpose test by union funds and they are doing nothing. What’s ASIC response? More regulation for financial planners.
Your comments are spot on, ASIC regulate the things they understand and put in the media, if it isn’t covered by the corps act they dont touch it. So many things raised as failing the BID have simply been a technical breach of the act, ASIC rarely considers the client’s genuine best interest being more interested in scoring points against the big instos which is the dark and funny part of their behaviour.
I have had a similiar problem where I whistleblew on some very bad activity (this is long ago) and I never even got an email back. I left the group and went on with my career and 6 years later the firm got an EU and only investigated the smallest part of what was really going on.
But it’s our fault because none of us are education /sarcasm. This group was run with guys with multiple Masters and whatnot (paragraphs on their business card at minimum).
You forgot to include, “ASIC was told about CBA Financial Planning senior management cover up by Jeff Morris and 2 other financial planner “whistleblowers” and did absolutely NOTHING for 18 months while they files were cleansed/purged/or misplaced!” cheers