A new Parliamentary inquiry into financial advice has been opened, after the Opposition accused the Government of failing to appropriately respond to the Commonwealth Bank (CBA) advice scandal.
Lodged with the Parliamentary Joint Committee on Corporations and Financial Services this week, the inquiry will consider proposals to lift the professional, ethical and education standards in the financial services industry, including:
- The adequacy of current qualifications required by financial advisers
- The implications, including implications for competition and the cost of regulation for industry participants of the financial advice sector being required to adopt
- Professional standards or rules of professional conduct which would govern the professional and ethical behaviour of financial advisers
- Professional regulation of such standards or rules
- The recognition of professional bodies by ASIC
Announcing his party’s intention to call for the inquiry last week, Shadow Treasurer, Chris Bowen, argued that the Government’s Future of Financial Advice (FoFA) amendments would place consumers at greater risk of another Commonwealth Bank-style scandal.
“The Abbott Government has been too slow to respond to this scandal and the Opposition is concerned it will simply sweep it under the carpet because it finds the issue politically inconvenient,” Mr Bowen said.
“While the Commonwealth Bank’s announcement last week of compensation for victims is a good first step, it falls well short of what’s needed. The onus shouldn’t be on customers to come forward – the Bank should be working its hardest to identify customers.
“More importantly, this should never be allowed to occur again,” he said.
Submissions to the inquiry will close on 5 September 2014.
Parliament needs to ensure they review whether the FoFA laws will actually deliver more affordable and accessible quality advice
Outgoing Financial Services Council CEO, John Brogden, responded to the call, saying the industry was an ‘open book’ and that it would work with any public inquiry.
“However, the Parliament needs to ensure they review whether the Opposition’s FoFA laws will actually deliver more affordable and accessible quality advice – as promised when they announced the FoFA legislation in April 2010,” Mr Brogden said.
“Everybody agrees more Australians should get financial advice.
“Whilst FoFA has delivered reforms over the past five years that give the best consumer protections in the world, it will fail if millions more working Australians do not seek financial advice.”
Meanwhile, two of Australia’s other major banks have backed their financial advice compliance regimes, saying they will not follow the CBA’s lead in conducting a full-scale investigation into advice provided by their aligned businesses.
A spokesperson from MLC/NAB said the bank will not be conducting a similar investigation on its aligned advice businesses.
“We have led a culture of putting our customers first and a fee for service model that attracts advisers of similar beliefs and values. This culture is evidenced by MLC’s transparency agenda on fees,” the spokesperson told riskinfo.
“We have a robust, multi-faceted governance process and strong compliance culture across the organisation.
“NAB has a compliance team consisting of approximately 30 people who regularly assess and monitor the delivery of advice within our network of advisers.
Similarly, Westpac and its wealth management arm, BT Financial Group, said it was confident in its compliance processes.
“Westpac/BT have always been focused on the quality of our financial planners, as such we have the smallest team of financial advisers of the banks and AMP. We also conduct thorough checks on any adviser before they join one of our businesses, including a review of the most recent compliance checks with previous licensees, police and reference checks, as well as reviews of the ASIC register and banned adviser list,” BT’s spokesperson said.
“Our culture and leadership have always encouraged issues being raised and a response that is swift and maintains customer confidence. We are very confident in the governance, compliance and monitoring systems and processes that we have in place. We also exceed the industry standard for annual Continuing Professional Development requirements for our advisers, and we require compulsory ethics training as part of meeting their CPD obligations.”
