In an open letter to FPA chair Matthew Rowe – seen by ifa – AIOFP executive director Peter Johnston said his organisation is “dismayed and frustrated” with the FPA’s positioning, calling its offer to oversee the compensation process for CBA advice victims as “almost egotistical”.
“In the current case of Commonwealth Financial Planning [CFP], it is clearly a product manufacturer/management issue that allowed their advisers to indulge in advice and activities that were clearly not in the best interests of clients,” the letter states.
“Surely this is a Financial Services Council [FSC] matter? Shouldn’t they be commenting on the conduct of one their corporate members? Why are the FPA continually seizing on opportunities to denigrate the advice industry?”
Describing the FPA as being in a “servitude relationship with the regulators”, the letter also hits out at the FPA’s role in “past FOFA negotiations with former minister [Bill] Shorten” which “heavily discriminated against the independent sector”.
More broadly, Mr Johnston said the CBA advice scandal is a “prime example of [an] institution lacking integrity, not the advisers” and said all stakeholders need to stop “continually blaming advisers”.
To counteract the FPA’s 10-point plan to raise professional standards, the AIOFP has outlined seven recommendations for industry reform, including additional accountability measures for research houses and financial product manufacturers.
Meanwhile, the FPA has welcomed CBA’s announcement of a widespread review and changes to its compensation process, with a caveat that it will be watching progress closely.
“While the specifics are yet to be confirmed, CBA’s adoption of our recommendation of an independent review panel as an escalation point is a positive step in the right direction,” said FPA chief executive Mark Rantall.
“The FPA will make it a priority to review the action to be taken by CBA to increase education standards. We have proposed that CBA introduces a mandate that each and every one of their financial planners must undertake ethics training, commit to no less than 30 hours of professional development per year and sign up to membership of an approved professional association.”
The full text of the letter and reform recommendations can be accessed here: http://www.ifa.com.au/blogs/13402-an-open-letter-to-the-fpa
Yes you’re quite right there disillusioned. Advisers who really just want to provide client specific advice and dare to question the current “best practice standards” soon discover the cone of silence. You really have to get your own license but that’s not easy nor is it supported.
Join a bigger licensee then it all becomes scale and efficiencies where they don’t want advisers using alternate products or strategies…gets too messy.
90% of the job is compliance, 10% actual advice and I don’t think I am exaggerating. Financial advisers are being cornered into ordinary advice provision dressed up as quality advice.
We really do have an industry-wide problem, and sorry ASIC et al but fofa doesn’t fix it.There are still plenty of practices operating off the same old models, one platform for all clients, age-group defined recoms (prod & strategy). As young advisors we’re told it’s done due to the ‘ease of reporting’. But how is it that it’s tailored, individually-specific financial advice when every client between the age of x and x is receiving almost exactly the same strategy, right down to the recom of products? This is at a practice level people, don’t even get me started on the insto’s and the programs they’ve devised to deal with their off-cut clients.As with all forms of abuse it’s the silence that allows it to go on. The finance industry, being as small-townish as it is, heaven forbid you put your hand up and tell everyone what REALLY goes on….you’d never work again. It’s a shame that we in the finance industry require a set of regulations just to ensure we do the right thing by people.
Wake up guys. The real issue here is the big institutions ( banks and industry funds ) targeting customers directly and in doing so creating carnage that is destroying our reputation as financial planners. We would be better served having a united front against direct marketing and the pretence that employed telemarketers and bank staff are advisers. The debate on whether self employed advisers are better served under their own license or under a dealer’s license is a debate for another day. The institutional push for more and more regulation for financial advisers and little or no consumer protection for consumers that go direct to them must be our top priority to address. It is a blatant grab for FUM with no regard for the collateral damage and all this bickering is aiding their agenda.
I am not a member of FPA-they really don’t cater for riskies. But for FPA to be taken seriously by most advisers they should have NO board members with connections, directly or indirectly, who are connected to product manufacturers or their distribution arms.
FPA should also be seen NOT to charge for the manufacturers “booths” at its conferences to avoid any suspicion ( its about perceptions )that the charge has been grossed up to hide what is really sponsorship.
And that goes for the AFA as well
And yes it will be tough for a while, and a few un-necessary staff may not be required,but neither body will ever be seen as a professional body representing advisers until ALL umbilical ties are severed.
And neither body should be posing as independent for the purposes of acting as a mediator in issues like the CBA problem. That’s what regulators do !
A number of our clients have brought the CBA debacle to our attention stating the fact that we are Independent planners who have no ties to the large instituition’s which they are pleased with. It once again shows that the bias is still within the banking financial planning sector. It is sad for us all as we all get a little tarnished by this fallout when it is once again only the few bad apples that make it harder for all the good ones !!
Financial Planners and the Financial Planning industry still need a radical change for everyones sake. The public just keep witnessing scandal after scandal. You can not hide behind your SOA’s, you can not hide behind your “fee for Service” mantra, you can not justify expensive plan fees and servicing fees. This industry needs to streamline its cost, compliance and ease of doing business so advice is obtainable by all END OF STORY! Without these changes a Financial Planner will be as popular as Rolf Harris at a blue light disco soon.
[quote name=”shirtenshizer!”]Surely its up to the licensee to ensure that representatives education standards are adequate, including ethics training! A fiasco that the FPA is taking on the role of second tier regulator – The FPA will make it a priority to review the action to be taken by CBA to increase education standards”. Unfortunate that seemingly everyine, the FPA in particular, has an agenda. It would be much more appropriate, should a second tier regulator be required, that this function was undertaken by a pure independent group. Stand up AIOFP![/quote]
Shirtenshizer how is FPA not an independent group? It makes no money from product and institutions cannot be members. AIOFP has a badged platform which it clips the ticket for and was horribly implicated in the whole trio/astarra fiasco. If we are going to have any form of Self regulation going forward I would rather it be the professional body that represents the majority of planners than a questionable bit player
Good article and all pretty fair comments
Saw a poll for a royal commission on the CBA saying overwhelmingly yes. Lets be careful for what we wish as a royal commission will let a genie out of the bottle that no one will be able to get back in. This will cause a monumental change of the whole financial industry not just planners. This is why it wont happen – the big players (retail and industry funds along with banks and other financial players) are afraid of the impact on their business. It will show that fundamentally planners are not the problem but are currently now where the buck stops. The required framework of a royal commission will need to be so wide it will be enormously expensive and take forever to complete. So be warned if the royal commission is restricted to the CBA it will be a waste of time & not achieve the required outcome.
Some where along the way ASIC changed its tune. Back in 1999 they had no hesitation whacking an EU on Westpac for training its advisers to claim to clients that did not earn commissions, Westpac carried a big stick.
The ASIC business model has always preferred a few very large licencees, not a lot of small ones. They wont admit that of course, but a few large dealers are easy to oversee.
ASIC like heads on poles, for the big splash-to scare the horses
Then along comes CBA, a classic case of product manufacturer driving sales of products. Yet a few years ago they banned a few obviously bad CBA advisers BUT did nothing about the sales culture at CBA and every other bank with a product line to flog
Agree with funky Goose, I have had many posts stopped due to comments of articles & reporting that is nothing more than advertorials for people promoting their product or for promoting self-interest. Without the appropriate disclosures that this is the case. Planners must fully disclose their interest but no one else seems to interested in doing the same.
Surely its up to the licensee to ensure that representatives education standards are adequate, including ethics training! A fiasco that the FPA is taking on the role of second tier regulator – The FPA will make it a priority to review the action to be taken by CBA to increase education standards”. Unfortunate that seemingly everyine, the FPA in particular, has an agenda. It would be much more appropriate, should a second tier regulator be required, that this function was undertaken by a pure independent group. Stand up AIOFP!
I would have thought that notwithstanding CBA FP’s vertically integrated financial planning model the responsibility for acting in the client’s best interests always and inevitably is the responsibility of the financial planner. There can be no excuses at the financial planner level. If there is a conflict between the financial planner’s individual obligations (particularly BID) and the Licensees business model then I would have thought that the financial planner’s only option is to resign. Having said that, in the case in question, CBA FP Management have a lot to answer for and seem to have been let off very lightly by ASIC in my view.
It is alarming that financial planners and their practises continue to be the pawns of the banks and industry funds. Their manipulating of the media and political lobbying highlight all that is wrong about the media ( ie lack of accountability over content ) and the political process ( ie how easily the senate representatives can be played ). Where is the voice of the many trusted advisers that continue to provide quality advice and service and employment opportunities for graduates and older Australians looking to remain employed in a service industry ?