The failings of bank-owned financial advice businesses should be published in an annual report which would detail names of errant advisers and employers, according to a parliamentary committee conducting a review of the four major banks.
In its second report, released late last week, the House of Representatives Standing Committee on Economics recommended that the Australian Securities and Investments Commission publish the first report by the end of 2017, which would detail the overall quality of the financial advice industry as well as a breakdown of misconduct.
This breakdown would include specific data on misconduct by Australian Financial Services Licence (AFSL) holders or their adviser representatives and any consequences faced by either AFSL holders or their representatives who have been found guilty of misconduct.
In the report the Committee stated “…the provision of poor financial advice is a systemic problem” and it regarded the recommendations as “…critical reforms that are strongly endorsed by the committee” that, in conjunction with other reforms, would lead to culture change within the banks advice businesses.
“…the provision of poor financial advice is a systemic problem”
The report further stated the misconduct report could be modeled on the proposed claims data and claims outcome reporting regime for the life insurance industry where information would be provided at an industry and institutional level.
The Committee also recommended that following a breach of behaviour by an adviser, an AFSL holder should be required to contact all clients of the adviser notifying them of the breach, after it found this was not standard industry practice at present.
“When a financial advisor is found guilty of misconduct, the committee believes that the clients of that advisor should be notified as soon as possible. The committee was disappointed to learn that this is not standard industry practice,” the report stated.
“AFSL holders should not expect consumers to be monitoring ASIC’s website to learn of misconduct – particularly misconduct that may have been systemic and may have resulted in their savings being placed at elevated levels of risk,” the report added.
