Released on Monday, the Hayne commission final report recommended introducing new laws to disclose an adviser’s lack of independence.
Under the new laws, a financial adviser assuming or using any of the restricted words or expressions identified in section 923A(5) (including ‘independent’, ‘impartial’ and ‘unbiased’) must, before providing personal advice to a retail client, give to the client a written statement explaining simply and concisely why the adviser is not independent, impartial and unbiased.
In response, Lifespan Financial Planning chief executive Eugene Ardino told ifa there are very few planners out there who can claim to be truly independent under the rules laid out in Section 923A of the Corporations Act.
Even if they do manage to meet the definitions, Mr Ardino said they can’t legally call themselves independent unless their dealer group also meets the definitions.
Further, he noted the lack of transparency around the banks’ planning structures as one of the major problems highlighted by the royal commission.
“We support increased disclosure. We also feel that advisers and licensees should have to disclose details of parent companies especially when they are product providers,” Mr Ardino said.
“It will actually be advantageous for us to show clients the extent of our impartiality in comparison to the financial planning arms of the banks.”
INSIGHT: Alex Whitlock, director of Momentum Media, shares his views on what the Royal Commission means for Australian borrowers and competition.
Kadava Ken’s gone bloody mad. More lawyers and more litigation? Bloody hell. Only a lifetime lawyer, AO, born with a big silver spoon in his big gob with lots of mates still at the bar who ditched his old woman and four kids for a young sheila barrister who needs lots of work could come up with that one.
Sounds like jobs for the boys (and the sheilas. Some of them are lawyers too) to me matey. Just what we all need. More lawyers and more litigaytion to make sure them non-bank financial planners all go down quicker than the Mortgage Choice share price.
And no bloody commissions! No trailers and eventually no up-fronts! Howz that gunna work Kenny? How us boys gunna get paid, ya silly old bugger? Ya didn’t think of that, didya? No commissions means no bloody income for anyone but the bloody banks mate. And that can’t be a bloody accident mate. Reckon Kadava Ken’s been buying up bloody bank shares on the side and made a quick killing going long when every other bugger went short.
Whatcha after, a seat on the NAB board? Some more frigging franking credits? Everyone thought ya was asleep but now we know ya was thinking ahead all the time. Bloody genius.
We’re all gunna end up Over like Dover we’re gunna be on the dole with Tezza and best of luck if ya borrowed to buy ya business mate. Ya bloody stuffed now. It’s all gone. Bloody bankrupt or may be even dead. It’s no laughin’ matter, but it’s what ASIC and the banks wanted mate. Ya can be sure of that. And you can be sure they’re all laughin.
Have to laugh at old Kenny though. Ya can’t mess with Kadava Ken. Them NAB boys gave ‘im a bit of stick and didn’t grovel and suck and tell im he’s great and all that and they’re really sorry and it’s not who they are and all that malarkey so Kenny came back to life and got stuck right into ‘em Nab boys and told ‘em right off. Nah, nah, nah, nah na. Suck on that ya naughty NAB boys.
Who would have friggin thought? The banks win. Sco Mo never saw that one comin’.
If ya ever gunna get banned now’s the time matey. Nothin’ bloody to lose now mate. Just go bananas churnin’ coz its gunna be all over soon.
Someone give Ol’ Lifey him own column. He’s hit the nail on the head again. Kadava Ken, wonder how him and the new missus are travelling? pretty damn sweet i’d say. Imagine the convo Friday night in the sack when he handed over the final report to beancounter Frydenberg. “hey honey, come here and give old Kadava Ken some lovin’- I’ve F#cked the financial advisers, F#cked the mortgage brokers and given the banks a free pass to continue on their merry way. All of the RC talk is making me randy, now fetch me one of those blue pills in the top drawer and put my denchers in that glass of water…
You, sir, are a riot. I love your posts. they are my favorite. please do not stop.
very funny, hilarious, totally on point. keep going mate, if ya know what I mean
AMP currently hands out a 20,000,000 page FSG stating a range of kickbacks, BOLR, incentives, inducements and other benefits they may or may get. Yet the majority of AMP owned advice businesses disclose on page 5 of their website a tiny small AMP Logo on the bottom of the page, which ends up looking exactly like mine…. and most AMP advisers think they’re independant because they have the option of recommending “one” another insurance company that pays AMP $250,000 a year to be on their shelf.
Just another piece of paper, or process, that is going to make it harder for small business.
If I was a client I would be more interested in a simple statement that explained how my life savings are protected by the advice practise I am using if something goes wrong. Hayne is made out to be some sort of God when in fact half baked recommendations such as these show he is very human indeed.For the politicians to blindly accept every recommendation without working through the issues with experts in the industry is pathetic. What value do we get from the parliamentary salaries they are paid ??
Well said John. Hope relevant people read your comments.
Guaranteed they won’t.
Propablt the same percentage as those who will read an SOA will read the report…
Sorry John I don’t follow you. Do you think clients are more concerned about their adviser (or licensee) having $1b stashed away so that when their poor (or no) advice is uncovered there can be some form of protection. How about the advisers just do the right thing by the client in the first place.
There is a difference between requiring advisers who are licensed through a vertically integrated AFSL either by ownership or relationship, disclosing fully that relationship and the actual conflict of interest that brings against requiring all advisers to explain why they are not something (independent, unbiased etc) that they are not even claiming to be.
No other industry or profession has that imposed on them – if I am going to a GP does he have to disclose that he is not a neurosurgeon or when I go to a lawyer is he expected to declare that he is not an SC when they are not claiming to be.
Surely despite what Haynes said the FSG should be the tool to provide the disclosure about the relationships and we dont need another document to re-inforce what we are not claiming to be.
One concise (and yes, cheeky) explanation you might give to clients is this: “The law won’t let us call ourselves independent, impartial or unbiased simply because of some legacy remuneration arrangements we have in place. This despite the fact we are WAY MORE on your side than (say) a BANK owned advice business – as the recent Royal Commission amply demonstrated. We are always working to place our clients in a better position.”
Too smart by half. Why not get rid of the “legacy remuneration”, stop taking money from product and to call yourself independent.
What if my clients had been happy to pay me (or the originating adviser I acquired a book from) that way in the first place? It represents an asset on my Balance Sheet. It was legal and an accepted payment method at the time. I don’t hear many advisers with trails trying to force those who operate without them to stop operating their businesses in a way that suits them. It’s become fashionable to say trails should be banned but I’m not convinced trails are the actual problem. And Best Interests Duty has (imho) rendered the entire debate somewhat moot.
Fair Brett, except that the legacy trails (not OFA) seem to imply something now. At the moment there are quite a few claims against advisers where only a trail is being paid and there is no service or arrangement ever contemplated. Not much of an asset, more like a potential liability.
I have been using a similar statement at every 1st meeting for the last 10+ years!
You are implying independent is only about ownership. The law does not let you call yourself independent because when you accept commissions you also accept there is conflict between your interests and the clients.
If you explain the contents of your FSG to the client as is required then you should meet this requirement
Seriously is the best you can do for article ?
Can someone inform Eugene , that disclosure was requirement already