A government review into industry-based dispute resolution schemes has heard representations calling for financial product providers to be made more accountable to FOS.
As part of Treasury’s Review of the Benchmarks for Industry-based Customer Dispute Resolution Schemes – launched by former Assistant Treasurer David Bradbury in April 2013 – the Association of Independently Owned Financial Professionals has argued that financial advisers have become the industry’s “whipping boy” in cases of financial collapse and that manufacturers should take greater responsibility.
AIOFP executive director Peter Johnston voiced his organisation’s concerns in a meeting with officials from Treasury’s Commonwealth Consumer Affairs Advisory Council last week, telling ifa it was an “interesting discussion on an issue that has frustrated us for many years” and that the council has requested a formal submission on the issue of FOS powers over product providers.
“Advisers are constantly in the firing line for their conduct, but product manufacturers, who also need to be a member of a complaints resolution scheme to maintain an AFSL, are never held to account by FOS if they are negligent,” Mr Johnston said.
“There are many instances over the years where product manufacturers are clearly guilty of mismanagement but we or consumers need to challenge them through the courts to get justice.”
In a subsequent letter to the relevant committee, seen by ifa, Mr Johnston called for the introduction of a panel of industry experts to independently assess product failures and bring “mismanagement” by product executives to account, including cancellation of an AFSL if necessary.
“Advisers and product manufacturers are both foundation members of FOS (FICS in the past) but only advisers are held accountable for their conduct with clients savings,” the letter stated.
“Advisers rely upon ASIC/APRA, research houses, trustees and product management executives to do their part in the product development/distribution process, [but] unfortunately we have been let down badly over the past seven years.”
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