Speaking to delegates the AFA 2015 National Adviser Conference In Cairns, Mr Kell said that “we’d all be kidding ourselves,” if we thought that industry problems were the result of a handful of rogue advisers.
“There have been systemic issues and the way that structures have been put into place,” he said.
“In the case of generally poor advisers, the problem is that they haven’t been identified and [businesses] haven’t provided a reference or lodged a breach report when they move on. So, its not just a bad apple, it’s a bigger problem.”
Despite this, Mr Kell said that the regulator does not expect “perfection,” but instead institutions that act swiftly to remedy issues, rather than simply sweep bad practices under the rug.
“We know that things go wrong from time to time. So the key thing isn’t if you have a flaw free record, but it’s how you respond and that is where we see the big difference,” he said.
He said financial services institutions needed ask whether they have responded promptly to problems, whether they have reviewed systems and determine whether it’s a one off problem or something more systematic.
“The biggest difference isn’t between firms that have a perfect record or not, but the difference is those who act and those who don’t,” he said.
Speaking in the same session The Ethics Centre’s Simon Longstaff said that certain institutional settings made it different to the an ethical advsers.
“Once you get into a large structure, there are a range of commercial considerations that come to bear,” he said.
But that same time he reminded the audience that they “are not bound to follow it.”
Mr Kell pointed to the success of the adviser register, saying that firms were now coming forward to report poor practices.
“[The adviser register] has proven to be more popular than expected. Firms are now coming to ASIC and talking to each other about concerns with adviser behaviour,” he said.
[quote name=”Gregmax”]The obvious, logical conclusion from Mr Kell’s comments above, is that compliance officers and firm’s management teams all need to either take a massive pay cut ( because we all know that is the solution to all wrong doing ) or be sacked.[/quote]
The logical conclusion is to separate – legally – advice and product. Product providers should be barred from providing advice.
This will obviously never happen as the all-powerful FSC wouldn’t allow it. So if we are going to keep the current system, we will keep the current problems and everyone will just have to accept it.
It’s a bit like the US with it’s gun laws. It is a tragedy every time there is a mass shooting but – if you are not prepared to do anything about it – you have to learn to live with it.
If ‘institutions’ and ‘firms’ are the ones who need to take responsibility for “generally poor advisers” then what is the connection with the remedial action of slashing ALL advisers commission and inflicting a 3 year clawback on all of us. The obvious, logical conclusion from Mr Kell’s comments above, is that compliance officers and firm’s management teams all need to either take a massive pay cut ( because we all know that is the solution to all wrong doing ) or be sacked.The longer this whole debacle goes on the more ducking and weaving for cover emerges.
“The biggest difference isn’t between firms that have a perfect record or not, but the difference is those who act and those who don’t,” he said
Well…perhaps the Govt could have listened to advisers in the first place regarding insurers knowing who the bad apples are and actually doing something about them – instead of BDMs and management counting their bonuses when they come on board and complaining when they move the business down the track.
This is shameful. We now have Mr Kell telling us that our ‘problems’ have been caused by lack of competency, poor values and poor culture. The very things the researchers at ASIC did not consider important enough to include in when framing their research for their Report 413.
Ms O’Dwyer, please take note before you make your decisions.
A pretty good couple of comments in the article. The industry’s perception, and reality, has multiple causes and we can’t discount any of them. There some historical rogue advisers and there will be more in the future – we have to accept that as a sad fact of business – and they have heavily contributed to a bad image. The instos are without doubt the root cause because it is them that created, and maintains, the framework that advisers work under. So much comes down to money, not our clients money but the money that drives instos and by association, or entrapment, SOME advisers. Advisers we are bombarded by excessively paid BDMs flogging the instos “so different” managed funds – remember they get paid by volume moved not BID. We have excessively paid Practice Managers “helping” us build out businesses but in a lot of cases only trying to flog the parents products ( true independent licensees are excluded from this moment ). PD Days have evolved into thinly veiled product flogs. SOME bigger licensees put all their compliance pressure on the lower producing or product supporting advisers while giving 3, 4 or 5 strikes to the big writers.
This perhaps leads to the whole ethics question. Businesses like Simon’s stand to make a lot of money teaching instos ( instos though will try to say that they are teaching their advisers ) to be more ethical. Is there not something wrong when large longstanding instos have to seek outside advice on how they can be more ethical – what have they been doing in the past? Too many questions need to be asked and answered.
Here you have the perpetrator of ASIC 413 publicly saying that financial institutions kept quiet on these issues, said nothing, and this has now turned everything on its head with advisers suffering all of the consequences and responsibility and industry once again industry no accountability?Have I missed something?
As an ex-practice manager for one of the big 4, it has always been known who the smoking guns are. Unfortunately, too many managers are very good at protecting self interest ( and life-style), and believe me this tuns from top to bottom of these businesses!
The issue is pretty simple – the banks have for the past decade or so, put bankers in charge of managing Planners. They go about managing them as if they are banker’s and are clueless in what’s required.
What you then have, is these bankers putting a lot of pressure on these Planners to get sales. If sales are not coming through – they are threatened with performance management.
The Planners, in order to keep their job, starts to take short cuts to appease their boss by selling at all costs.
When the Planner has their audit – bingo they get caught not following proper process
The Planner gets reported, losses their job for flogging products as opposed to doing what they should be doing, get reported and banned from ASIC.
The Manager who is still clueless gets a bonus for ridding the organisation of a crook. no one ever asks why the Planner did what they did and even if they do, nothing is ever done. This has been going on for a long time and I am amazed that no one in senior management has woken up to it.
Its a disgrace what we are seeing in the banks with their incompetent leaders who are only concerned with sales and have no idea of the support these Planners require in order to do their job effectively and in a compliant manner.