An adviser's clients should be notified as soon as possible whenever that adviser is found guilty of misconduct, according to a recommendation from a parliamentary committee.
The House of Representatives standing committee on economics said in the first report on its review of the big four banks that, when an AFSL holder becomes aware that one of its financial advisers has breached their legal obligations, that AFSL holder be required to contact each of that adviser’s clients to advise them of the breach.
The committee said the financial advice industry is not being sufficiently accountable to its own customers and to the general public.
“The committee was disappointed to learn that this is not standard industry practice," the report said.
“When a financial adviser is found guilty of misconduct, the committee believes that the clients of that adviser should be notified as soon as possible."
NAB argued in the report that in cases where the provision of poor advice was not systemic that notifying all clients may create unnecessary stress.
The committee said the argument was “not compelling”.
“The financial advice industry needs to demonstrate that it has heard community concerns,” the report said.
“Customers have the right to know if they have been advised by someone that has been found guilty of misconduct.”
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