The ABA has outlined the steps taken so far by banks to comply with the Banking Reform Program, including progress on the financial adviser register, adviser industry standards body and last resort compensation scheme.
Released yesterday, the ABA’s Annual Report on the Banking Reform Program outlines the steps taken by banks so far to fulfil promises laid out in the program and to meet recommendations that have been put forward by the Sedgwick and Khoury reviews.
As part of the Banking Reform Program, the ABA said banks would implement an industry register for identifying financial advisers with a history of misconduct. Financial advice banks adopted the ABA Reference Checking & Information Sharing Protocol for advisers in March 2017 and banks are also now finalising a new Conduct Background Check Protocol for all bank employees in general, the ABA said.
This broader staff check protocol is expected to be adopted by major banks by 1 July 2017 and other banks by 1 October 2017, the ABA said. This means the sector will beat the initial deadline set out in the January progress report from independent reviewer Ian McPhee, who predicted that the staff check protocol would be established by December 2017.
The ABA also pointed to the fact that the banking sector will be funding the financial adviser independent standards body, which was introduced by the Minister for Revenue and Financial Services Kelly O’Dwyer as part of the recently introduced adviser education reforms.
The new standards setting body, responsible for developing a code of ethics and determining education requirements for advisers, is set to be operational by 1 July 2017, the ABA said.
Further, the ABA said it is making good on promise number six of the Banking Reform Program, which is to demonstrate support for ASIC. The ABA said it has been working with the government to implement an industry funding model for ASIC. As reported by ifa recently, the controversial funding model, which will levy the advice sector $24 million, was introduced into Parliament in March.
The ABA said banks are working on part of commitment number two of the banking program, which is “making it easier for customers when things go wrong”. Section 2.4 of the program states that banks will “evaluate the establishment of a mandatory, prospective last resort compensation scheme covering financial advisers”.
The ABA said the sector has been engaging closely with the federal government and FOS to support the establishment of a mandatory, prospective last resort compensation scheme for financial advice, as outlined in the Ramsay review.
The ABA will make a submission on the final Ramsay report, due to be issued late June, and will detail a proposal for a last resort compensation scheme.
“In reality, the financial and prudential strength of the banks means bank customers would not need to access such a scheme with banks being able to directly remediate their customers if things go wrong,” the ABA said.
“However, the banks believe such a scheme is important to rebuild trust in financial advice and as part of the reforms to create financial advice as a trusted profession.”
Commenting on the overall progress of the sector, chief executive of the ABA Anna Bligh said, “There is a great deal of work which has been completed and work that continues to be implemented. Of course, there is more to be done.”
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