FPA, AFA business models grilled

The royal commission has questioned whether there is an “inherent conflict” at the heart of the two main financial adviser associations, with very different responses given by the FPA and AFA.

Appearing before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry today, FPA chief executive Dante De Gori and AFA chief executive Philip Kewin were separately interrogated, with a focus on member disciplinary procedures.

During cross-examination, counsel assisting Rowena Orr QC asked both CEOs whether their very make-up and mission statement may be conflicted.

“How can an organisation that is seeking to make itself attractive to potential members in comparison with other industry bodies, also at the same time as seeking to make itself attractive to regulate the conduct of those members?” Ms Orr asked Mr Kewin.


“Isn't there an inherent conflict in those two propositions?”

Mr Kewin responded that he “didn’t think” there was an inherent conflict, but went on to acknowledge there was a “tension” between the functions of promoting and regulating financial advisers.

Ms Orr put a similar proposition to Mr De Gori.

“The two things are difficult to reconcile, is what I'm putting to you, “she said. “On the one hand you're wanting to promote financial advisers, nd I'm putting to you that it's difficult to do that at the same time as imposing disciplinary sanctions on financial advisers for misconduct.”

The FPA chief executive rejected the proposition, saying the FPA has a “dual purpose” and that the two missions are “equally important”.

He conceded however that the dual purpose is a “challenge” for the association in practice.

The two CEOs also differed in their response to questioning about the current status of the financial advice industry.

“Do you see financial advisers as being part of a profession or part of an emerging profession?,” Ms Orr asked both chief executives separately.

When pressed, Mr De Gori confirmed that he thought the latter, that the industry is an “emerging profession” and that it is not yet equal to professions such as law and medicine that have “been around for centuries”.

By contrast Mr Kewin indicated that the industry is currently a profession, on par with doctors and lawyers. He said that the “majority” of advisers are professionals and the “majority” of clients would see them that way.

Compliance consultant Brett Walker tweeted that the testimony may cause problems for the associations in their bids to become code monitoring bodies under the FASEA regime.

ifa has previously criticised the “dual purpose” of the two associations in two editorials: 

The royal commission financial advice hearings continue live:

FPA, AFA business models grilled
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