The Senate inquiry into ASIC and CBA, and subsequent debate, have been a “body blow” to the financial advice industry in terms of trust and reputation, says Financial Services Council chief executive John Brogden.
Speaking at the launch of the FSC/DST CEO Survey in Sydney yesterday, Mr Brogden said the Senate committee report was the “most significant negative finding” since the collapse of Storm Financial in 2009.
“I feel we are back to square one in terms of reputation and trust for advisers, and there is no doubt for the honest and hardworking advisers that this was a body blow for them,” said Mr Brogden.
However, he was quick to point out that the misconduct by CBA advisers occurred before the FOFA regulations had been put in place.
“We do need to give FOFA a chance to do what it is meant to do, and we do need to move on the education issues,” said Mr Brogden.
The requirements contained within the FOFA regulations are “worlds apart” from the former requirement in the Corporations Act to merely provide 'appropriate advice', he said.
But the biggest challenge for the advice industry will be to build the right culture, said Mr Brogden.
“You can legislate until the cows come home and you can require educational standards, but what needs to be developed is a culture. You need a cultural shift,” he said.
Asked whether there are other “ticking timebombs” in the industry, Mr Brogden said ASIC will be “out there looking for [them], as they should be”.
“ASIC will rev up its investigations and that will deal with the rogues in the marketplace, but the only way we will establish a genuine culture of trust is [by getting] the culture right,” said Mr Brogden.
“We are in a new world, there is no doubt about that. We are in a new world, but as we left the old world we got dragged back in by a few scandals,” he said.
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