During a lengthy grilling from counsel assisting Michael Hodge, CFS executive general manager Linda Elkins was asked about an internal presentation from November 2016 regarding licensee service fees.
Mr Hodge paid particular attention to a line within the presentation, which explained that CFS “[did] not require (or intend to require) licensees to provide positive confirmation of ongoing service” in order to receive the fees at the time the presentation was delivered.
Ms Elkins countered that this was “just incorrect”, but agreed with Mr Hodge’s assessment of the sentence.
“You said this statement is just wrong. This seems to be saying you don’t require licensees to provide positive [confirmation]?” Hodge asked.
“I guess you’re right. It says positive, yes,” Ms Elkins said.
“So that is correct?”
“That’s correct, although not necessarily because any case where we investigate we would require them to provide that positive attestation.”
CFS is currently reviewing new ways for licensees to confirm ongoing services are provided, Ms Elkins said, adding that many advisers have “been very helpful” with this process.
“They obviously also are aware of the ASIC report and advisers are working with us to look at how that can be provided,” she said.
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This entire line of questioning is idiotic, and comprehensively demonstrates the RC’s ignorance of the Financial Services Industry; and how Product Manufacture, Advice, Service, and Oversight interact and operate.
It also comprehensively demonstrates the [b]lunacy of the RC[/b] and the majority of its conclusions, not to mention the outright stupidity and venality of politicians. as they leap to support the wildly irrational and draconian RC recommendations, which, IMO, is straight out of “Alice in Wonderland”, with Haynes functioning as the Mad Hatter.
1. CFS [as are other Fund Managers and Insurance Companies][b] are “Product Manufacturers”[/b], “Product Providers”, and [b]not “Advice Providers”[/b].
They provide services of different types to Clients, Advisers, and Licensees, and i[b]t is nowhere near their purview[/b] to monitor or assess advice provided to a client, [b]or whether any services and/or advice was provided “downstream”.[/b]
Moreover, advice of any type tends to be “lumpy” and occurs in bursts, as events occur, actions are implemented, develop, or are contemplated. Clients also need time for changes to percolate through their consciousness and awareness.
[b]Platforms and Fund Managers have absolutely no idea [and usually, neither do AFSL’s] what is occurring between a Client and an Adviser, and/or whether advice is being assimilated for later implementation, a project is gradually being researched and developed, and/or work is being done elsewhere, but being paid from ongoing Adviser Fees from a particular Fund.[/b]
[b]Any attempt to involve them in operational advisory aspects[/b] is both a perversion of the the “Intent of the Legislator”, the law itself, and their role in “The System”. Any attempt to have them intervene or intrude is gross abuse of position and power.
2. CFS and Commbank’s sanctimonious, hypocritical, “Holier than thou” a$$ covering conduct in the recent Dover debacle, by unilaterally seizing, refusing to pay, and/or erasing Advisers from Client accounts was enough evidence of this. There were other “Manufacturers who did this also, albeit with somewhat less strident, less blatant ar$e covering sanctimonious hypocrisy…
Demands or expectations of “Positive Affirmation” of service and/or advice provided is akin to the prosecutor’s famous question: “And when did you stop beating your wife, sir?” and construction of a “Guilty until proven innocent” system.
What does a Product Manufacturer have to do with the relationship between me and my client? Who are they to judge, from the position of a “Service Provider” at least 5 steps away, the nature of my relationship and work with a client?
3. [b]BTW, there is no essential difference mooted here to the activities which started after the “Life Insurance Code of Conduct” of 1996, where snot nosed 22 yo New Business clerks [/b]were given the mandate to review new insurance applications, and started asking: “Why did you use a 90 Day Wait rather than a 30 Day Wait?”, etc, etc.
Of course, the Insurers also tried to get Advisers to have Clients sign off [in the Disclosure of Capacity and Needs Analysis] that “…I have received [b]everything I need to make a decision[/b]…” and [b]”…I am fully informed…”[/b] or words to that effect, thereby attempting to avoid liability and shift it to the largely ignorant, trusting Client.
[b]Nothing new under the sun[/b], just ever more ignorance, stupidity, venality, corruption, and predatory conduct by the “Big End” and their lackies…
Linda Elkins went to water on this same issue in a previous RC round. I suspect Hodge sniffed weakness then and decided she would be easy pickings this time around for another scalp to put in his trophy cabinet alongside Terry McMaster.
It would be no surprise if CFS completely caved in to this bureaucratic bullying and forced clients to pay all adviser fees direct in the future, rather than allowing clients to take advantage of the tax, cashflow, and convenience benefits of paying fees via product.
Seems like there moving to ban advice fees deducted from Super funds.
I’m pretty sure Lawyers can collect fees before they provide the service which may or may not result in a better outcome for their client and may or may not be commensurate with the actual work provided. Can we please have a royal commission into the legal system?
No product provider does (or should) require proof that services have been provided. The simply need to (and do already) give clients a way to turn off. Banks, PayPal, etc all work the same way with direct debit agreements. So many other questions that should be asked. Idiots.
Nanny state on steriods if these lawyers got their way…
In this example the bank systems would see that the client authorised the bank debit….something that CFS have no visibility over?
CFS (and all other product providers) require clients to authorise all fees by signing a form. The Royal Commission is suggesting that in addition to this, CFS (and all other product providers) should ensure that the services agreed upon are provided before releasing the fees to the adviser even though the client has already authorised the payment.
This is such a silly argument to make. Does a bank go out and check that a plumber has actually installed a hot water system before they authorise a bank debit?