Responding to questions from ifa, Smart Compliance principal Brett Walker said the enforceable undertakings ASIC accepted from the Commonwealth Bank and ANZ were potentially the result of two driving factors.
“Banks may authorise staff to provide general – not personal – advice so they can inform customers about products such as the in-house products at issue here. It is likely the conversation with customer has (i) identified existing super and (ii) involved some sort of implied or explicit recommendation that the customer consider rolling over to the in-house product,” he said.
“The failure to perform adequate comparison of existing product and then compare it to the in-house product (after all, how can the staff do that within context of the conversation described in the [ASIC] media release?) is probably another key concern – apart from staff not actually being authorised to give personal advice in the first place.”
Mr Walker added that it will be difficult for banks to stop staff who are authorised to provide general advice from providing personal advice in the future due to the way the banks currently operate.
“Banks will need to better script the processes and train staff about how not to fall into the personal advice trap,” he said.
“But this is extremely difficult to do (in my opinion) within the context of gathering data from people that identifies existing holdings in a product or product class that is at the heart of the in-house distribution drive.”
changing the term general advice to general information does not help the issue. A product can still be replaced without any research or consideration of the customer’s needs with general information. Information should be allowed on existing products held directly only. As soon as the conversation strays to external products; the customer should be referred for advice. Client’s still won’t be able to make the distinction between information and advice no matter how scripted. Customers will still have their super consolidated without consideration of the loss insurance benefits, or put into a new insurance product which is basically the same as existing to access NB commission/meet targets, without understanding the impact on the non-disclosure status of the policy.etc.
Someone has to pay for the banks’ overheads. Enter customer, stage left.
What about staff having KPI’s and sales targets?
Yes it’s a problem but maybe Financial Planners should take some responsibility for this problem and look at themselves. We could make advice more accessible for all by working on reducing red tape (achieved by reducing Government Regulation and intervention) and making advice tax deductible. This could be done by becoming better educated, walking away from relationships/licensing via product manufacturers…both personally and at the professional association level. I think this is called self regulation…but hey I don’t need more education blah blah and I’m happy for PI costs to rise and dealer group fees to be double in 2019 so you can all go and get screwed cause I only sell Risk or Super…what a stupid idea…self regulation. … professionalism…stupid…All I’m asking is for the FPA to end their relationships with AMP/CBA & what a stupid thought that is.
I would like to see reduced Government regulation as much as anyone, but realistically, it is not going to happen, because there are no votes to be gained by a Government for doing it.
This extends all the way to private bankers who do not understand how imputation works flogging millions of dollars of bank hybrids as income ‘enhancement’ and calling it general advice. There should be no ‘general’ advice. Look at the legal profession. It’s legal information or legal advice. If you stray into the advice sphere watch out if you’re not a lawyer. End the semantics & only let advisors advise.
The problem has never been with the staff, it has do to with management. Management are the ones telling the staff what to do, so it is them who need to be trained.
That’s exactly right and most people are aware of it. Not to worry. The days of these bank “management level” employees with no advice qualifications or experience are very close to over now!
MEMO ASIC. Ban GENERAL ADVICE ! It has always been abused, as noted above, by bank staff & the direct floggers. No “script “will cure the problem. If banks paid staff appropriately, no one would be tempted to breach because there are no BONUS $$$ available. And Michael, getting asked to “come in ” when a term deposit is leaving one bank for another IS NOT “HELPING” nor customer focused- it is a retention strategy!
Totally Agree.What on earth were they thinking when they combined general and advice together. Ridiculous. We have seen BT and Westpac flog super on the basis that the sale was general advice. Banning General Advice is a no brainer.
The Productivity commission has actually recommended this but it is getting no traction due to vested interests. This should be called ‘General Promotional information’. The term ‘Advice’ should not be included in this sort of marketing ever. With the Royal Commission this is the best opportunity we will have to get this rubbish away from our profession.
https://www.moneymanagement.com.au/news/financial-planning/productivity-commission-urges-end-%E2%80%98general-advice%E2%80%99
Share the link above and make as much noise as you can
Why don’t bank tellers just focus on providing the client service they need and leave it at that. They aren’t salespeople and certainly not advisers. If they see a need, position a meeting with an adviser.
1. How would they be able to discern a need from a 3 minute encounter at the teller box?
2. you’re right, they are NOT advisers or sales people, and their employer (the bank) should know this and act accordingly.
they need to stick to their knitting rather than hawking a product jsut because the customer is there in the branch
Industry Super fund call centre staff and Accountants both licensed and unlicensed discussing SMSF set ups are also doing this daily. Super fund transitions and set ups cannot be discussed without a licensed adviser completing full data gathering and preparing an SOA with fully detailed product comparisons. Anything else is a breech but so many in the industry and around it don’t get that.
Maybe not call it “advice” as there is none, ban the term general advice and call it general information
A good bank employee is customer focused and seeks to help. Problem is that inadvertently the helpful employee steps over the line and extends the conversation into areas that can then be relied upon by the customer for decision making. Thus intended general advice to help out becomes individual personal advice.
The more helpful the bank employee is the more problems he/she creates.