In its submission to the Senate’s ‘scrutiny of financial advice’ inquiry – yet another review of the industry initiated by Labor senator Sam Dastyari in recent weeks – the bank has implored the corporate regulator to beef up its AFSL application process.
“We believe there is scope to further strengthen the licensing process to ensure that only appropriately resourced and well-governed providers are able to obtain an AFSL,” write Westpac executives Mark Spiers and Brett Gale in the submission.
“The role of the licensee is central to consumer protection, trust in advisers and the strength of our regulatory model.”
The submission reflects on the 2012 St John report, calling for ASIC to take a more “proactive approach” to PI insurance and ensuring adequate consumer protection mechanisms are in place.
It also laid out the case for a self-regulatory organisation (SRO) to be created to take over some of ASIC’s traditional responsibilities.
“The SRO would be a new body that has a clear mandate to set and govern professional, ethical and education standards for financial advisers,” the submission states.
It suggests that this organisation will be responsible for issuing practising certificates for advisers, setting professional standards for licensees and examining levels of transparency across the industry.
The establishment of an SRO of this kind would result in a “narrowed” ASIC that would nonetheless “remain crucial”, it suggests, adding that the government’s adviser register could in time also be transferred from the corporate regulator to the SRO.
The SRO should not be there to “lobby or advocate” for advisers, the submission states.
Not all bank planners are entry level, but a good percentage of them are. It may not have been entry level planners at CBA or Mac that created the problems, but it probably was. It may not have been an entry level Responsible Manager who was responsible for the poor advice provided, but it probably was.
The point is this, large institutions have large numbers of entry level people in a lot of roles, it is the nature of the beast.
My view is, generally speaking, people develop their careers by moving from the institutional space to the non-aligned space, whether you be an adviser or a Responsible Manager.
Dave. I have no intentions of doing your research for you but as an example You only have to look at Hub or Netwealth to find a platform that provides superior service then the banks at a much cheaper prices. Also as I am an independent advisor with my own AFLS I often compare all the banks and they never get into my list simply because of their bloated 2 & 20 fee structure, their slow an unresponsive service support and their poorly trained brochure delivery men.
This is pretty typical of the big banks: they won’t take responsibility for their advisers even though they have humungous resources at their disposal. All the resources in the world failed to protect clients of CBA and Macquarie from their advisers not acting in the best interests of their clients. It’s not about the AFSL. It’s about the organisation that employs the advisers under that AFSL.
Dave. Clearly you have no idea what your talking about. People don’t come to advisors knowing what they need or want. The banks aren’t cheap, their products are generally the most expensive. Last point is the banks take a cut of all advisor fees. You should really get your facts correct before making stupid comments.
My car dealer is one of the biggest& as a result, gets large kick backs & rebates from the manufacturer. As a customer, this benefits me because I can buy my new car cheaper from them than I can elsewhere because they don’t need to make as much from me since some of their profit comes from the manufacturer. What’s wrong with that? I, the customer, am the winner…
The banks have great scale and make their money from the products and management fees, not from the adviser advice fees. However, their products are amongst the cheapest and most innovative available due to the investment the banks make in them.
Who wins from this? The customer who gets quality advice for a cheaper price and a quality product at a very competitive price too.
So long as the person giving the advice is highly qualified and competent and driven by doing the right thing, the current system works for the consumer, why are we all so against banks?
Who would market the banks products if their advisers didn’t ? The more advisers that become independent the better, this will give the people in the major institutions something to think about. Our licensee has grown by 100% in Independent adviser numbers over the last twelve months alone, speaks volumes for there business model and service , its fantastic
It appears to me the separation of product and advice is just around the corner. This has happened elsewhere in the world, Australia is lagging behind.
Strangely, I believe the separation would benefit the consumer, the product manufacturer and the adviser.
The only people to be adversely effected would be the fat cats at the ISN and the banks clipping the ticket.
This is coming from a bank that charges their financial planning clients 3-4% upfront entry fees on rollovers, investments, and SG contributions.
Trust me, I used to be a planner there before I left in disgust.
What a load of rubbish. I worked for Westpac and can’t understand why they have not been busted for their boiler room tactics. Really this is just another example of how the watch puppy is to scared to take on the big end of town. Shame! Slackpac Shame!
CBA is arguably the most well-resourced company in the country. There goes that argument. this just shows how worried they are about the rise of independents, aint no stopping us now.
Financial planners want to be professionals like doctors, accountants and solicitors. These can hang out their shingle when they qualify and have PI insurance.
It was the “well resourced’ planning firms that were ordered to repay millions to damaged consumers. There is no evidence that other professionals not so “well resourced” place their clients at risk. the evidence is quite the contrary.
Westpac’s arguments is self serving and demonstrates that the ‘well resourced” will not give up their privileged position without a fight.
If some of the SoA’s we have seen have from so called well resourced AFSL holders are any indication of what clients can look forward to then these organisations really need to have a good look at where their resources are being spent. Especially in the area of risk insurance.
Financial advisers or planners have been asking that they be recognised as a “profession’ for years. Accountants, doctors and solicitors are often used as models.
All of these can hang out a shingle when they satisfy their respective bodies they can. For Westpac to suggest that “only well resourced organisations” should be able to get an AFSL flies in the face of the wishes of the industry. But it would entrench banks and insurance companies. There is little evidence that consumers are at risk because of the model used by Doctors, solicitors and accountants. Why would they be at any more risk if that model was used by planners. The facts are that it is the big players such as banks that have been involved in the horrendous cases that has made front page news. As noted by Westpac the big players will not give up easily.
So, Westpac wants to raise barriers of entry, benefiting who, exactly? Err, Westpac and the incumbent banks. And they want to decrease ASIC’s powers (may be not such a bad thing), and give those powers to who exactly? Err, Westpac and the incumbent banks. Who takes this sort of self-serving rubbish seriously? Too often, unfortunately, the politicians in thrall to them.
Advisers in the financial services industry can never claim that theirs is a profession. If advisers obtain the necessary and appropriate qualifications to provide advice just as accountants, lawyers, doctors, engineers etc do, why is it necessary to have a “well resourced” licensee involved. Appropriate registration and continuing education similar to all other professions would suffice. While vertical integration within large institutions exists; while legislative and bureaucratic influence from large institutions maintains conflicted client outcomes the financial advisers will never have a profession where their training and knowledge determines independent client outcomes.
If advisers are educated and qualified to deliver advice why should they be any different to other professionals such as accountants, lawyers, doctors etc? Why is there such a need for “well resourced” licensees? Products designed and owned by institutions may be a part of the advice solution but should not entitle the institutions to wield such legislative and bureaucratic influence. Vertical integration entrenches conflict of interest and forever will condemn the financial services industry to transactional based sales as opposed to a profession.
Yes Nathan, spot on.
The UK told the banks you either manufacture product or distribute product. NAB decided fairly quickly that it manufactured and shed its advisers in UK. So we know which side they think provides the bulk of the money.
Banks in Australia then ask by stealth for the government to mandate the further concentration of conflicted advice under the guise of resourcing.
The first item of resourcing to be checked should be how many unconflicted advisers do you have? Unconflicted being that the adviser doesn’t get paid, directly or indirectly, by a party who is manufacturing product.
In the banks and other institutions case the answer would be none so they would fail at the first hurdle.
Of course the banks would argue the first question should be how much money does an AFSL to pay settlements have when they stuff up like we do? What a enviable standard to work from!
Smack on Nathan,
Another example of self serving banks throwing up smoke and mirrors. Yes you should only have properly resourced and well governed AFSL holders. But look at the record of professionally run small independent boutiques. I would suggest that the first step to making the financial planning profession a true profession, is to cast out the large bank AFSLs who are inherently conflicted and vertically integrated. Its not really about the level of resources you have, but rather whether you apply those resources for the good of your client. Something evidence would suggest the banks have trouble doing.
The role of the Licensee failed to pass scrutiny where CBA and Macquarie were concerned. Is this a case of the big boys preparing for an exodus??