December 15, 2015
- AFA Rejects Licensee Codes of Ethics;
- ASIC Bans Former Meritum Financial Group Adviser;
- Midwinter Enhances Life Insurance Offering
AFA Rejects Licensee Codes of Ethics
The Association of Financial Advisers (AFA) has labelled suggestions that licensees create and maintain their own codes of ethics are needlessly reinventing the wheel while creating potential conflicts of interest.
The AFA made the statement after the release of draft legislation covering the education and professional standards of advisers called for advisers to subscribe to a professional Code of Ethics.
AFA, Chief Executive, Brad Fox rejected bespoke codes created by licensees stating professional associations had already created robust and effective codes that were developed through cross-industry collaboration to be relevant to members and their clients.
He said these codes “effectively set expectations for ethical and professional conduct above and beyond the letter of the law. If licensees were to create their own codes, monitoring and resolution procedures, we believe it would be akin to reinventing the wheel.”
Fox stated that any further codes created by licensees would mean that regulators would require more resources to assess and monitor the codes which would be open to conflicts of interest.
“We are also very concerned about the perceived and real conflict of interest that would be created by allowing licensees to have their own codes, albeit with a third party monitoring service. This would mean licensees would need to sanction themselves for failure to adhere to their own code. We don’t see this as best practice for an industry in the process of establishing itself as a recognised profession.”
ASIC Bans Former Meritum Financial Group Adviser
The Australian Securities and Investments Commission (ASIC) has banned former Meritum Financial Group adviser Mark Lionel Tidbury from providing financial services for six years after finding he recommended clients shift superannuation policies so he could derive increased adviser fees.
ASIC said the super fund moves provide little benefit for clients but added significant additional costs in the switching with the regulator stating Tidbury had:
- failed to act in the best interests of his clients, by giving them advice that may leave the clients in a worse position than if they had not followed his advice
- failed to accurately disclose the fees associated with the advice
- failed to put the interests of his clients ahead of his own when he knew that there was a conflict between his and the clients’ interests
- failed to provide sufficient information to clients about the charges associated with the switching of their financial products.
The banning of Tidbury, who was a representative of Meritum from August 2013 to June 2014, will be recorded on ASIC’s register of financial advisers and he has a right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.
Meritum, which is owned by NAB, identified Tidbury’s misconduct through a proactive commission data review with the bank welcoming his banning and is continuing to review advice and compensate customers impacted by inappropriate advice provided by Tidbury.
Midwinter Enhances Life Insurance Offering
Financial planning software provider Midwinter will roll out an enhanced life insurance module designed to help advisers meet best interest duties under the pending Life Insurance Framework.
The updated module will also make better use of comparisons between life insurance offered via retail channels, via a superannuation fund or a mix of both and has been released in two phases, with the enhancements aimed specifically at boosting the efficiency of life insurance advice generation by changing how the cover and policy types are selected.
The first phase will allow advisers to select any insurance cover combinations as well as the insurance structure and the insurance policy type while the second phase of the upgrade includes enhanced insurance research data to allow advisers to compare retail and group insurance in the one analysis.
Midwinter, Managing Director, Julian Plummer said the changes were designed to offset the time advisers need to prepare for the Life Insurance Framework.
“Obviously the change in adviser remuneration is going to have an impact on adviser profitability, which means a higher focus on efficiencies within their advice practices. This means we have had a major push to further decrease the time it takes to produce insurance advice in AdviceOS.”
Previously, users could only compare a limited number of combinations of cover type for inside and outside super. Now, AdviceOS users can compare any product across all structures. The benefit of these enhancements means that advisers can concentrate on modelling the underlying insurance strategy regardless of the structure, or how the insurance is packaged.”