Appearing before the Senate’s ‘scrutiny of financial advice’ inquiry in Canberra yesterday, Nationals senator John Williams grilled senior representatives of CBA, NAB, ANZ and Macquarie on whether they knew if advisers they had “sacked” for giving inappropriate advice were still in the industry.
Responding to Senator Williams, CBA group executive for wealth management Annabel Spring said a total 43 advisers had left Commonwealth Financial Planning between January 2012 and March 2015.
Of the 43 that had left the business, some were terminated while others had left the company following investigations, she said.
Ms Spring then told the committee that she “knew of planners that were terminated” with the bank’s licensees and are now active with another dealer, adding that they appear on ASIC’s adviser register.
Addressing the same question, NAB Wealth group executive Andrew Hagger said he believed a number of the 41 advisers NAB had sacked for poor advice were also still providing advice.
“Now that the adviser register [is live] – I haven’t sort of done the stock take of the number – I think a number of them are still in the industry,” Mr Hagger said.
Macquarie Group deputy managing director and head of banking and financial services, Greg Ward, revealed that of a total of 11 advisers whom Macquarie had terminated and flagged with ASIC, he was aware that some were also operating in the industry.
“Anecdotally, I have heard some of them are still working in the financial planning industry as a financial adviser,” Mr Ward said.
“We have breach reported the individuals to ASIC [but] the way I find out, anecdotally, is I see firms announce their appointment.”
However, ANZ global wealth group chief executive Joyce Phillips – who also appeared before the committee along with deputy chief executive Graham Hodges – said she was not aware if any of the advisers that were terminated for inappropriate behaviours and compliance breaches were active in the industry.
She did reveal, however, that 16 ANZ advisers have been terminated in the past 12 months, many associated with the problems surrounding the Prime Access financial planning service.
The proven to be shonky planners from NAB or ex NAB and other banks should be named so the poor unsuspecting public can see if they are working for another entity or worse still, having set up business for themselves. Then we would all know where not to go to for so called “advice:. But what a toothless tiger ASIC is. They could name the bad advisors quite easily. Who is protecting who here?
The following questions should be asked during the senate’s inquiry:
1. Who has the power of hiring & firing the planners?
2. Who hired the PDMs who manage the planners?
3. Who are responsible for planners’ training & brainwash them?
4. Who set targets & KPIs?
5. Who create the remuneration model that drives behaviours?
6. Who are responsible for monitoring & reviewing staff’s activities?
7. Who decide the bank’s reward winners?
8. Why are some dodgy planners receive rewards repeatedly?
9. Who dictates how clients are allocated?
10. Who swept things under the carpet when clients complained?
11. Why are these people granted immunity when they are in control???
We urgently need legislation to hold bank managers personally liable, named & banned from management & consulting for their actions just like company directors!!!
[quote name=”Con Intrest”]Sales culture and conflict of interest!
It was foreseeable that consumers would be the casualty especially when performance is measured by sales – no sale = poor performance; and financial institutions with a fund management arm is an inevitable conflict of interest![/quote]
The answer is to – via legislation – separate advice and product. Make these companies decide whether they want to sell product or provide advice.
I would also legislate that the advice providers cannot be owned in any way shape or form by publically listed companies. This would remove the emphasis from profits – particularly short-term profits.
Alternatively, dramatically increase the penalties for VI entities whose “advisers” provide bad advice for so that it is unprofitable for them to do so – which currently isn’t the case. This would also help fund ASIC’s monitoring responsibilities.
Michael, your comments are spot on.
I also seem to remember the high incidences of ‘stress leave’ taken by planners with one of the big 4 as well.
Underperforming planners (not non compliant ones…there is a difference) felt the sales management blowtorch regularly. If they didn’t sell, a lot of management pressure was applied.
Bank culture always was & is about selling product….it’s deeply embedded in a bank exec’s psyche.
Product sales IS the benchmark for exec compensation and underlying bank profitability / shareholder value.
So bank planners are just a means to an end & are very expendable, as the next ‘newbie’ to be trained up will always be ready to go.
It probably wouldn’t surprise anyone to know, but a number of the dodgy planners rose to management positions in the big 4 advice channels, and they are still sitting their presiding over the supervision and monitoring of the planners who are subject to the storm caused by them!
You could not make this up!!
I am probably referred by the media as one of the 41 advisers sacked because of “poor” advice. I was sacked on the spot after a planner on PIP complained that I did not refer a client to him. My role was replaced by a mate of the GM with no FP experience & my clients were taken over by the planner who complained.
I worked as planner for NAB for years & compliance review had always been excellent. Only had 1 complaint from an inherited aged client who was unhappy with MLC’s slow processing of her withdrawal.
I sought legal advice afterwards & lawyer said I have a strong case because of unfair dismissal. The bank eventually compensated a small amount & told me to shut up.
I can’t agree more with Davey & Michael. Without public knowledge, a dead person can be named hero or villain. Sure there are dodgy planners but please think of the exec & PDMs – they just blame the people they control & still roam the industry!
Banks’s management & PDMs created & drive the system, appoint people they want, encourage & reward the “star planners”. When something goes wrong, they just brand the very same people as “dodgy planners”. It’s easy to find scapegoats & brush their hands clean.
These managers still roam the industry & with the big banks, jumping from one to another. An ex-NAB PDM who was at the centre of the issues has now become an Executive Manager of CBA’s Open Advice Review Program… It’s like appointing cartel leader to the justice system – what a joke!
Sales culture and conflict of interest!
It was foreseeable that consumers would be the casualty especially when performance is measured by sales – no sale = poor performance; and financial institutions with a fund management arm is an inevitable conflict of interest!
The regulators answer to all this chaos is more education… really, is that the answer?!
All Banks have so called “league ladders” which were invented by senior management and are based on in house product and insurance sales – planners usually compete with each other to stay on the top of their respective ladders. BTW – league ladders only recognize “in house” funds and some funds / products get double counted. If the planner is behind the target, bank management steps in to “help” the planner not to go on “performance improvement program” and “in confidence” tells the planner to use funds which would benefit the planner (and the client hahaha!)
This sounds fundamentally wrong to me!
I would like to see any bank executive comment on this…
This is a regulator failure.
If a planner is breach reported to ASIC, then it’s is up to ASIC to account for why the breached planner is then authorised to represent another AFSL.
If a planner is terminated by any AFSL for conduct requiring a breach notice and that AFSL does not advise ASIC then the AFSL is negligent.
It is either the fault of ASIC or the AFSL if a ‘dodgy’ planner continues in the industry.
I know of no ‘dodgy’ planners who’ll blow the whistle on themselves.
Does anyone?
Its true. I know of a certain planner who was dismissed from the CBAFP for not producing SOA on advice and charging for that advice and has run his own practice under a different licencee and now is employed yet again. People like that make me and other honest advisers look bad.
The better question Senator Williams should have asked each representative is “How many of the managers and executives who were responsible for the oversight of these recalcitrant planners benefitted from the bad advice and are still employed with the same bank? And are you one of them?”
Why am I not surprised! I have been in the business for 40 years and this has been happening for 40 years.
Is this the pot calling the kettle black or what! These banks owned and operated the relevant licensees implicated in the poor advice debacle. These organisations are responsible for the advice provided. They are all still in the business. Management is again seeking to blame the so called “rogue advisers” for their aggressive and inappropriate product flogging. If the banks can purportedly mend their ways, why must the advisers be sent to perdition?
Why am I not surprised. I have been in the industry for 40 years and this has been happening for 40 years.
Banks are loving this noise. Why don’t they name those advisers who they supposedly “sacked”? I know lots of great bank planners who left banks because they got sick and tired of bank’s way of doing business. Australian banks need to own up to their own agenda on their position on ROE, “share holder value”, “cross sell”, and all other product sales initiatives and incentives they push on to their employees.
The problem was never really the planners, it was the idiots managing them, most of which are still in leadership roles unscathed! Poor management drives poor behaviors which drives poor advice, this is what happens when the exec has the foot to the throat!
Not surprising…ASIC don’t seem to care about this sort of stuff – it’s not a priority for them. They aren’t even interested when an attempt is made to report an adviser’s less than ethical behaviour. It’s very disappointing.
That’s all well and good to push all responsibility back to the planners. What about the dodgy execs that created the unsustainable sales models in the first place and went behind ASIC’s back to manipulate files etc. Where are they now? Moved on to create more carnage down the road or still employed in the same position. What is ASIC and the Senate hearing doing about them???
I feel sorry for all the young enthusiastic advisers out their watching their industry getting ripped to shreds. I feel more sorry for all the ex banking advisers that were told to do their job, fell behind in the sales figures, were suddenly given high risk ratings when they previously had excellent clean records, lost their job, took months to get back into the industry and were told to repeat the same process again at another bank. Senator Williams liken you to pedophiles. Destroy the sales culture, Ban and shame the advisers that profited beyond the bank control mechanisms but don’t destroy the lives of advisers that did what they were told to do and were chewed up and spat out by the banks when they didn’t do it.
The biggest/infamous churner in my area has their own AFSL, is ex dealer group and the some insurers have declined to work with them due to rewrite rates.
This is hardly surprising as it is virtually impossible for a prospective licensee to find out exactly why an adviser has been terminated. Even if breaches have been reported to ASIC, unless the adviser is banned, this information is deemed private and won’t be disclosed.
I came from an AMP background many years ago – it is more than likely that a number of these ‘bad’ advisers were brought up through the bank system, trained by them and told not only what but also how to do things; and then given monumental KPI’s to continually meet week after week and month after month…
While it is no excuse for knowingly doing the wrong thing which I am sure is evident in quite a number of cases, I still get sick when the upper echelon change and the new ones try to distance themselves from their employees who have done the standard endorsed practise and point the finger as if the firm had nothing to do with it…