- No (54%)
- Yes (25%)
- Not sure (20%)
Our latest poll has been motivated by comments made by ASIC’s Peter Kell at last week’s AFA National Adviser Conference, during which he contemplated the role played by licensees in dealing with advisers with a poor ‘track record.’
Speaking at an advocacy session during the Conference, Kell pointed out that that ‘systemic issues’ have had as much of a role to play in perpetuating the potential for poor advice as those who participate in its practice (see: Business Structures Allowed Poor Advice to Continue).
In our story last week, we reported the ASIC deputy chair saying “We would all be kidding ourselves if we said the problems in the industry are just the result of a small number of bad apples. There have been more systemic issues, not necessarily because of the people, but the way structures have been put in place.”
Kell added there has been an ongoing problem of failing to report poor advisers or notify other advice groups when they have moved to another licensee: “People have not identified them or when they move to another firm,” he said.
This poll question relates to a subset of the poor advice practices discussed by Kell at the AFA Conference, namely churning. Historically, advisers have voiced their frustration, whenever the issue of churning has arisen, that life companies know who the serial churners are, but don’t do enough to address the problem. Does the same apply to licensee firms?
Kell noted ASIC doesn’t expect dealer groups to be perfect: “The key test is not whether you maintain an absolutely flaw free record. It is how you respond to problems.” He asked whether dealer groups take prompt and appropriate action to rectify poor advice issues when they arise, “Or do you fail to do most of those things thinking ‘we have identified this, but it is embarrassing and we might move a person on’ or ‘they are doing well for us’ and just give them a behind the scenes talking to.”
What has been your experience with your own licensee? Has your dealer done enough to address poor advice – specifically churning, within its ranks? Or do you think there’s more it can have done over the journey to appropriately address this issue, if and when it has arisen? Tell us what you think…
Having sat through Mr Kell’s presentation at the AFA it is apparent that Mr Kell is once again trying to avoid any responsibility for ASIC’s role in monitoring and supervision by continuing to bash advisers and now licensees in an obvious attempt to deflect attention from ASIC’s mismanagement.
The regulator has pursued an expensive and ineffective regime of disclosure and process that has led to licensees paying fortunes to consultants to inflict unwieldy compliance regimes on our industry.
All the while they have ignored the sensible solution of increasing education requirements for new entrants and actively policing the products available to retail investors.
FSR was introduced almost 12 years ago and the one who has systemic issues is the regulator. Time the government assessed its effectiveness and changed direction. Measuring success by how many scalps you have on your belt after the damage to consumers is done is not good enough.
There needs to be a clear and easy to follow process to identify, track and respond to poor advice and churning.
Where many good ideas fall down, is when the solution becomes part of the problem, in
that the process is complicated, takes valuable time to administer and unless the criteria is set up correctly, it will ultimately grind into a beaurocratic mess that does not achieve what it set out to do.
Licensees play a pivotal role as they must understand, educate and enforce compliance, which is becoming more complex and onerous.
Peter Kell and all of us understand the importance of advice, though finding bad apples and systematic inadequacies is only going to be reduced, when a proactive strategy is implemented that tracks current processes, with trigger points to act early, rather than reactively responding to problems that could have been building for years, before it all blows up.
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