Speaking with ifa, Quantum Financial principals Tim and Claire Mackay said ethical models can be taught and potentially adopted, but that someone is either ethical about how they do business or they are not, citing Storm Financial as an example of the divergence between compliance and ethics.
“Storm was true to the letter of the law but not the spirit of the law, and that’s where morality or your sense of ethics comes in,” said Tim Mackay.
His sister and business partner Claire – who has intimate knowledge of the Storm matter as a former industry representative on a related Financial Ombudsman Service panel – said that it is not enough to simply be compliant.
“We don’t have to have degrees to do what we do,” Ms Mackay said. “All we need is RG146. But is that really providing the best service to clients?”
Ms Mackay said that FOS had been inundated with cases following the GFC relating to Storm Financial as well as other collapses such as Legacy and Westpoint.
Quantum Financial has been a longstanding advocate of ethical financial planning and is a previous recipient of the Excellence in Business Ethics NSW State Award.
The comments follow a debate sparked by comments by financial services lawyer Peter Bobbin that the Storm case reminds advisers of the important distinction between ethical behaviour and compliant behaviour.
Having been contracted to review statements of advice issued by Storm advisers, Mr Bobbin said the documents had been “very compliant” but possibly unethical and in contravention of the “duty to the client”.
“Storm was a clear example of unethical behaviour driven purely by greed,” said one reader responding in the comments feed. “Any planner that had half a brain could see this trend and it was obvious to all that one strategy did not fit all- there in basic form is the ethical issue”.
Another commenter, describing herself as a “Stormie”, said the Storm Financial model SOA had been a “generic document which said nothing about how much or where money was to be invested”.
Former Storm adviser Wally Fullerton-Smith appeared in a Sydney court yesterday, charged with making false and misleading statements to obtain financial advantage.
Good article highlighting the difference between an Advice Professional and Product seller.
[quote name=”An Adviser”]Yes the Storm model was flawed. Yes the advisers were playing on peoples “Greed”.
But the clients have a responsibility also to 1. know what they are getting into. 2. If it sounds to good to be true it is. 3. Take some responsibility for their own actions and decisions.
All storm clients made the decision to invest, also made the the decision to borrow against their home. If they didn’t fully understand what they were getting into and the risk why on earth did they sign up. It all come back to GREED.[/quote]
I am not saying the the adviser was not at fault – they are, but the client has to take some responsibility in all this as the final decision is theirs.
An adviser borrowing against a pensioners house is criminal and no excuse.
I can agree in that sense, should he go onto say that he did not have any intention to cause conflict. I have done my fair share of reading over the last few years. And it can be the case that a read process only makes sense once stepping through this with actions.
It might be the case that Storm learns a lot from these types of things.
“Tim and Claire Mackay said ethical models can be taught and potentially adopted”
Thats rubbish – you don’t teach people to have a moral compass – you either have one or you don’t.
You know if you’re doing the wrong thing from the outset in 99.9% of all instances.
I think the Storm saga has been done to death and it is time all ethical advisers moved on and started focusing on more important issues with their clients. This to me seems like a publicity seeking exercise by Tim & Claire Mackay. We all know that the Storm advice documents were compliant, but that did not make the advice either ethical or appropriate.
An Adviser,
Yes you are correct it does come down to GREED , and I believe it is greed that can be placed fairly on the shoulders of the storm advisers.
No adviser would suggest to put clients into margin lending of any sort if they are on age pension or are not gainfully employed and on the top tax bracket.
We could go on about this for ever but the fact is the advisers were all about making big $$ for themselves not about looking after the clients best interest. I have actually seen some of the clients that the so called advisers ( i use the term loosely) have dealt with , and to put it simply it has destroyed their lives. People are now living in caravans as they have lost their home and life savings thanks to the Storm people. Yes sadly humans are greedy , but if the ethics and morals of the people involved in placing clients into these extremley high risk investments were in the right place the problem would not have occurred !!
Yes the Storm model was flawed. Yes the advisers were playing on peoples “Greed”.
But the clients have a responsibility also to 1. know what they are getting into. 2. If it sounds to good to be true it is. 3. Take some responsibility for their own actions and decisions.
All storm clients made the decision to invest, also made the the decision to borrow against their home. If they didn’t fully understand what they were getting into and the risk why on earth did they sign up. It all come back to GREED.