Formerly known as Chartered Secretaries Australia, the organisation is supporting an ASIC proposal to government that would see compulsory testing for all new and existing advisers on tier 1 products; monitoring and supervision of new advisers; and an online update review for all advisers every three years.
Under ASIC’s RG 146 guide, tier 1 products encompass all financial products not held under the “simpler and better understood” tier 2 products, which are subject to lighter training standards.
“There are continuing ongoing examples of where rogue financial planning advisers have cost mum and dad superannuates dearly,” Governance Institute chief executive Tim Sheehy said.
“Many will never recover from the likes of Westpoint, MIS and, most recently, CBA financial planners.”
“The reality is that the financial advising sector hasn’t stepped up to the plate in terms of ensuring its operatives have the knowledge and skill to provide quality financial advice.”
The Governance Institute said a 2011 investigation by ASIC tested the quality of financial advice and found that only 3 per cent of plans were of “good quality”, while 23 per cent were found to be “poor”.
Mr Sheehy said if the industry wants to be seen as a profession, it is important that “rigorous educational requirements” apply.
“Virtually every recognised and respected professional services body demands extremely high levels of professionalism of their members,” Mr Sheehy said. “Unfortunately, this is not the case in the financial advising sector and ASIC’s proposal for mandatory testing should be adopted.
“The future financial wellbeing of Australians should not be comprised by poor advice and advisers must accept that ongoing quality education and training is critical if they are to be effective stewards of their sector.”
In addition, the Governance Institute recommends the sector introduce a mandatory code of conduct under which members who do not comply are expelled.
Bad apples in any industry can still pass an exam. The issue with CBA was fraudulent activity followed by a cover up. Westpoint and MIS were product failures. Advisers may have been incentivised to direct clients into Westpoint/ MIS due to commissions, but now commissions are gone. Please explain how an exam would have prevented the 3 issues listed- Westpoint, MIS & CBA Planners.
Mr Sheehy may wish to consider if the collapse of Westpoint, MIS, ABC Learning etc was caused by the actions of financial advisers or company directors, who had company secretaries. Any of his members working at those firms / CBA?
His slur on the FPA and AFA is most ill considered, genalised and unhelpful.
Are any other professions held to account by a government body such as ASIC or provide a document that could be ‘graded’ by one?
We have a client whose life savings were destroyed by investing in mortgage funds as directed by their accountant (who was not authorised to provide such advice or a document to grade!) And then there are myriad examples of bad legal advice, poor medical treatment the list goes on.
We need to stop loading up the good guys with more over compliance – and accept that you can’t legislate against human nature.
Compliance has seen the size of an SoA balloon to the point where a summary document is often needed to enable the client to draw out the important bits. If dealer groups want compliance – don’t bother with a paper audit; meet a few clients face to face if you are fair dinkum. All for a bigger stick for the bad eggs – ASIC just need to speed up the back swing AND be prepared to lose a couple rather than just chasing the slam dunks!
I agree with the Secretaries Institute. I also call for all members of the Secretaries Institute to undergo testing every 3 years, because a lot of companies end up insolvent therefore the Secretaries are not up to standard.
Is that for all, ISN included, CFPs, CA and CPA etc or a select few at a certain education level. lets examine doctors solicitors etc in the same way OR is this a push by some group to make a quid and push for a money making event. How much education / CPD/ etc do we need. if you have done the yards why do we need to be re examined. Just watch the cost of planning go up because we need to spend X hours each week on “education” . The professional bodies including accounting bodies need to consider a reply to this one.