Self-licensed financial adviser Philip Carman of Personal Asset Services has written a submission to Treasury, along with his wife and business partner, fellow financial adviser Alison Carman, expressing their opposition to the proposed amendments to FOFA.
“[We] strongly believe that rolling back any part of the FOFA measures designed to increase transparency to and for consumers is both misguided and detrimental both to consumers and to the health and confidence in financial services,” stated the submission, which was seen by ifa.
Rather, “there needs to be a strengthening of regulation” and consumer protection mechanisms, Mr and Mrs Carman wrote, arguing that many practitioners are less scrupulous than others.
“As a 32-year veteran of the financial advice industry, I have seen many changes come and go, as well as too many dodgy dealings amongst my industry colleagues – some of whom have done gaol time, but others of whom have managed to slip past the long arm of the law,” the submission said.
“Consumers must be protected from those who are either poorly trained, conflicted by remuneration methods designed to encourage sales of product, or who deliberately seek to misrepresent and/or defraud consumers.”
The boutique advisers argued that FOFA’s conflicted remuneration ban should be furthered to ensure that “all advice [is remunerated via] fee for service rather than based on sales”.
The submission contends that the “distrust” of the financial advice profession is an issue of national importance and an “impediment to the economic health of the country”.
Have you written a submission to the public consultation on FOFA? editor@ifa.com.au
Not surprising it took a while for the Carmen view to find some support. A rave focused on historical generalisation and an exaggeration of the proposed FOFA amendments. The veteran view might get copy in IFA but does seem a little hysterical and self righteous in light of the proposal. Have you guys actually read the proposal because it seems you are parroting the ISA product provider view. The motives of the ISA are not protection of the consumer.
I hope the Carman contribution is given considerable heed as in my experience …. never truer words. This is not denigrating the profession as a whole as I know and regularly deal with many highly professional people dedicated to meeting their clients’ needs in an ethical manner. There are still many that aren’t and of course the degree of this varies widely. Few are out and out rogues but many are simply not diligent enough. We should not be watering down measures designed to protect our customer base and weed out (IF that is what these measures will do) those practitioners who bring the industry into disrepute so regularly. Having less of them will result in more business being generated as the industry gains more trust. I do wonder if the purported cost of the measures will be worth the gain of a higher level of respect in the community. It would be nice (and profitable) to think so
Philip, in the unfortunate event of a Client feeling that they were wronged as a result of our advice and wished to purse the matter in the courts, my legal team would love to be able to use the safe harbour steps as a defence strategy. However, the final step is not practical in application which renders the safe harbour defence useless. This is one element of FOFA that is going to be improved to make it practical. Perhaps you should ask your counsel about their feelings on the matter in the event that they needed to defend you. I am certain they too would love to rely on as many defences as they possibly could.
I’m 100% fee for service, but that’s my choice. It works for some, not for others. As long as consumers are told how much they’re paying, and for what, that should be enough.
We’ve all seen so much that is really, really bad advice yet still perfectly ‘compliant’, and I don’t see how any of the reforms truly address this, the bigger issue.
All I saw FOFA achieving was an increase in the costs of supplying advice, and this burden falls disproportionately on the smaller practices.
An unscrupulous advisor will always find a way to rort the system. The focus should be on identifying and eliminating these predators, not on building a higher fence to keep the public safe from their bite.
Every profession has someone like this. They denegrate their profession in a crude attempt to promote their business and get their name in the spotlight. He thinks this behaviour makes him look professional and superior to his peers, but the opposite is true.
Mr Carman’s comments are dated, misguided and self-serving. It’s 2014, not 1984. The majority of financial advisers I personally know are well educated, experienced and have high integrity. They’ve also helped their clients navigate through a global financial meltdown, and adapted to massive regulatory change, spearheaded by a hostile Federal Government. Mr Carman (and company) needs to step outside of his delusional bubble, take a deep breath and have a good look around.
I have never met a 32 year old veteran before. How long do you need to be in something to be classified as a veteran these days
The problem with our industry is two fold. Fofa is too expensive & unworkable & there are still many “compliant” morally bankrupt advisers out there. You know who you are & you know what you do. I for one am sick to death of having to do further studies, ever increasing compliance cost & constant anti cowboy measures that severely impact me as an ethical & caring adviser. The FPA & all the fee sucking dealer groups can fix this problem by scrutinizing every adviser & their strategy/clients/cost etc etc etc, then weed out the compliant rogues.
Philip, good on you for having the courage of your convictions, I do believe you were very attentive in your sales training classes those 30 odd years ago and I also believe that you want to move into 2014 with progressive idea’s. However, I do wonder if you might be holding on to some of the dodgy sales training from the 80’s? When touting for new business, “Disturbing the client” was never about making the client think their current adviser was dodgy, it was more about making sure the client had adequate cover for their chosen lifestyle.
While Mr Carman is entitled to his view I find it very disappointing that it is based on his view that he is superior to his peers. Self interest and basing your views on the lowest common denominator is very ordinary. To back up his view Mr Carman should be challenged to explain exactly how the FOFA changes will benefit clients. This is the same question I asked my local member and Mr Shorten. Something that was and never has been answered.
I agree wholehartedly with Laurie. There seems to be a cohort within financial planning that have the delauded belief that they are the only competent and honest operators in the profession. They also believe that they somehow benefit by deriding the profession and their colleagues at large to all that will listen. Every profession has its dishonest minority. To tarnish all of our reputations to government smacks of hubris and narcisism.
Tell me sir, for the person who cannot afford to pay for advice, how should they be looked after? Fee for service does not fit/suit all. The ratio of ‘dodgy’ advisers to professional advisers is minimal. What is to stop those dodgy advisers from charging excessively in a fee for service model? Those that wish to exploit or break the law, will find a way to do so. Arthur Sinodinos and team – please disregard this groups communication – it is not the view of the majority.
What in the FOFA legislation prevents someone who is intent on breaking the law from doing so? Precisely nothing! FOFA amounted to more legislated hurdles for Financial planners propagated by ISA/ISFN and championed by Labor and Unions. As a relative new comer to the industry (14 years) the inability of some to see past FOFA as misguided and ill intended has to be viewed with a level of skepticism.
The roll back is happening for a reason. Some elements of fofa were unworkable and poorly thought through with an agenda being driven by some who had very little to do with providing advice. I think suggesting that the roll back will give a green light to bad operators is alarmist and unhelpful. As advisers we need to focus our message on encouraging the public to seek advice, the profession has come a long way against a continual backdrop of legislative uncertainty and very little governmental support to the smes who are required to pay for the changes.
I have been in the financial services industry as an accountant and financial planner for 39 years and I have never seen such a self-serving view as expressed by the Carman clan. To say that many advisers are less scrupulous than others based on the ill-deeds of a minority is a reprehensible comment and does nothing to aid the Financial Planning Profession. I am the director of a boutique licensee with 16 authorised representatives and the regulations forced through by the former union influenced government were ideologically driven and no cost benefit analysis was ever performed. The amendments being proposed by the now adult govt in power do not diminish consumer protection, but certainly reduce the red tape imposed by the previous regime. How about providing some positive input to your profession instead of trying to diminish your financial advice colleagues.