ifa reported in September last year that the Australian Bankers’ Association had created a new protocol intended to encourage banks to check references and share information on bad apple advisers.
ASIC flagged the need for better reference-checking processes in March as a way to prevent rogue advisers from circling the industry.
While moderating a panel at the Banking and Finance Oath conference in Sydney yesterday, Ms Vamos asked what steps would follow this protocol, since it might not be enough.
“I had a situation where I was on the board of a financial planning firm and we actually terminated the planner because they were committing fraud,” she said.
“We did raise the issue with ASIC, but when we found out they had gone to another financial planning group, we rang the CEO of the financial planning group.
“I told them, ‘You are hiring somebody who we’re currently investigating for fraud. We’ve also raised it with the police’. They hired them anyway.”
ASIC deputy chairman Peter Kell responded by saying he would expect the situation to be reported to ASIC, even if it’s not a formal breach report.
He also reiterated the importance of reference-checking, although it is not something he expected would need regulation.
“Too long we’ve had the frankly hopeless situation of poor financial advisers being terminated at one firm and walking down the road and joining another firm,” he said.
“The first firm doesn’t provide a clear reference and the second firm doesn’t even ask for one. Now, that is both self-defeating and ultimately, in my view, unethical.
“It shouldn’t require regulation to fix that. So now I think it’s overdue and I’m very pleased to see we have a standard being introduced that can solve a problem like that.”
Good reasons to get rid of dealer groups altogether and go down the self licensing road.
ASIC would be much better VERY closely looking at the big 4 and AMP rather than pursuing advisers,
the bashing of advisers is easy the real stinky meat is within these vertical integrated Oligopolies!
Pauline please do the industry a favour to draw this farce to a halt now , ask ASIC to focus on restricted APLs and the promotion of house brand and calling it advice, their network of salespeople/advisers are only following the company line , obvious to everyone ….including you Pauline, you have more integrity to see this continue . Drain the swamp!
Best interest sits with the AR, not the AFSL. If your AFSL provider does not facilitate you as a professional AR to execute your professional duty then move on. As for the discussions about other unregulated industries giving advice, while I wholeheartedly agree with the points made it is a bit like me as a kid telling my mum something isn’t fair when I get caught because my brother did it too.
If we focus on our own professionalism first before trying to dob in others we will all be a lot better off.
Based on ASIC banning advisers now for failing to fulfil their ongoing service obligations means advisers looking for a new job now also need to be asking for reference checks of their potential new employer to ensure they are going to an environment which enables them to meet their best interest duty.
Licensed financial advisers have been engulfed by an absolute tsunami of regulation in recent years, yet people like Pauline Vamos are still carrying on about historical 1% issues? Surely the interests of consumers are best served by protecting them from the enormous amount of dodgy financial advice being dispensed by unregulated sources such as real estate agents, accountants, union fund spruikers, and “roboadvisers”.
Whilst the cleanup and focus towards professionalism has been a long time coming, Govt. policy and resources should now been moved elsewhere – unregulated property buyers and vendor agents for example.
Some advisers perform better in different environments. Some AFSLs like Dover check every SOA and file before it goes to the client and then at the other end you have others who don’t check SOAs at all before going to the client. One adviser might be better suited to Dover and the other better suited to Synchron and they may perform poorly if at the wrong dealer group.