The financial advice sector has yet to reach the point that it may be considered a profession, despite containing some professionals within it, according to ASIC Deputy Chair, Peter Kell.
Kell, speaking on the first day of the second round of hearings at the Banking Royal Commission, made the statement in response to a question from Senior Counsel Assisting the Commissioner, Rowena Orr, QC regarding the status of the financial advice industry.
“In ASICs view, it is not yet a profession. There are certainly professionals within the industry, but we do not view the industry as a whole as having reached what would normally be regarded as the standards of a profession at this point in time,” Kell said.
He added that it was the objective of ASIC and most advisers that the sector became a profession which had in turn lead to the introduction of proposed education and professional standards for adviser.
“…we do not view the industry as a whole as having reached what would normally be regarded as the standards of a profession…”
Questioned as to why the advice sector had yet to reach the standards of a profession, Kell attributed this to past practices around remuneration and education standards but also for a failure for the advice sector to be well represented.
“We would say that the standards around competency and the qualifications that you have to have to be a participant in the financial advice sector, the ways in which advisers have been remunerated in many cases, and the conflicts of interest that remuneration has generated between advisers and licensees and the clients, and…some of the conduct and consumer outcomes that have been very poor on a widespread scale, indicate that we’re not yet at a position where we have a profession,” Kell said.
“I would also note that we don’t have in this sector a single, dominant professional association. There are some associations which have taken a more forward looking approach to standards, but we certainly don’t have a professional association of the sort that you get in other sectors such as medicine,” he added.
The statements came at the start of Kell’s appearance at the hearing and were preceded by a few brief comments about the development of the advice sector and its current size.
So let me get this right. If you are a builder, your profession is a builder, if you are a doctor you are a medical professional, if you are a hairdresser your profession is a hairdresser. But if you are a financial adviser your profession is nil, niente, zero, zilch, nothing, a void,and a black hole. There lies the whole problem with Mr Kell. I have been looking for the person who drives all the rubbish we have to put with. Thanks Mr Kell for finally putting you hand up. Now I know who to blame. Thanks for the insult to my 35 years in THIS PROFESSION! Thanks for insulting all the many people I have assisted through my years. How dare you.
It becomes a mute argument about being a Profession, if the cost, hurdles and red tape make it uneconomical to run a Business to provide appropriate services to clients
Putting a fancy title on your card does not help if you cannot pay your bills.
I for one, am not so much concerned about bits of paper that show I am educated in areas that have little or nil bearing on what my Business provides to my clients.
What I am concerned about is how the new regime will destroy the Life Insurance specialist advice Businesses, through ill conceived and ridiculous regulation that hinders not helps all Australians from getting Best Interest advice around Insurance.
ASIC does not have enough experience to understand how the real world of Life Insurance advice works and yet they cling to a theory that has no bearing of what needs to be done and in actual fact, their recommendations will have a negative impact for the future of the Life Insurance Industry and all of Australia.
What evidence are you basing your comments on Mr Kell? An audit of only 200 files?
So lets stop having ASIC being responsible for Advisers and form a self regulating body – lets call it the Institute of Financial Planners (get rid of all voluntary bodies like FPA). I believe the Copper report back in 2006 recommended this – but no the politicians rejected this and we continue to have ASIC as our regulating body. How many Lawyers work at ASIC? Is Peter a Lawyer lets start getting a few Advisers (or ex-Advisers involved). If you want to talk about a profession why not look at Lawyers – Financial Advisers are more trusted than Lawyers. Try to get a Lawyer to quote their fees upfront – and if they do don’t be surprised when the bill escalates at the end when they add disbursements (got to laugh the last Lawyer I spoke to had as one of their disbursements a file opening fee of $25). If we did this we would be in strife with ASIC No wonder Lawyers are so untrusted. What do Politicians or ASIC want to do about that – Nothing – Oh wait most of them are LAWYERS.
I don’t consider ASIC as professional either. Can I now clawback their wages? I want their income to be slashed to 60% over the next 3 years. Will everyone at ASIC now have a uni degree? Be tested on things they don’t advise on? Be subject to an ongoing witch hunt at the behest if media and union funds & a Govt led by the nose by lobbyists?
So ? To me it appears that ASIC also do not consider AFA or the FPA as professional bodies either ? I trust there will be a reaction here as the very people who ignored this and let it fester and unfold and to a great extend accepted it as inevitable ?? are now having it thrown at them to
Well ?? Are you going to cop it or stand up to the ridiculous over reaction to professional needs ??
It strikes me that the 3 major ‘professions’ are medicine. law and accounting. How many people ask a doctor for advice if there is nothing wrong? Very few. It is a reactive industry. How people ask a lawyer for advice if there is no immediate need. Not many. It is a reactive industry. How many people would seek advice from their accountants if they didn’t need to complete a tax return? Very few. It is a reactive industry. The planning world is different. If we waited like the ‘professionals’, for someone to knock on our door for advice we would quickly be out of business. And as an insurance specialist I don’t want to be an ‘Adviser’. My blood still boils when I think back to one of the people who ‘represent’ us through an industry body saying to me he gets paid to give advice and doesn’t really care too much about the outcome. When I pressed further and asked about a situation whereby he gave insurance advice to someone who was declined cover he replied, “Not my problem. I gave the advice and I’m going to get paid for it”. If that is a ‘professional attitude’ I’m not sure I want to sign up. I’m certainly more concerned about acting professionally than being part of a ‘profession’ & I’m a lot more worried about finding ways to help my clients than I am about whether I have studied an unrelated subject and passed an exam that does nothing to help me serve those clients. Our industry is starting to look a lot like the old actuary joke. We’re turning out graduates who have been taught 215 ways to make love to woman but have never actually talked to one.
It is certainly dishonest and unprofessional of an organisation to only review 200 files of targeted risk advisers to reach the conclusion through Report 413 that 30% of risk advice is dishonest.
I also find it interesting that fee for service (or no service) is now a bigger issue than life insurance commissions which we are all being forced out of because commissions are “unprofessional”.
The Royal commission has also found more dodgy dealings in a few days from the real villains (the insto senior executives) than ASIC has ever managed to uncover in 10 years.
The same senior executives no doubt being very highly qualified as well as highly paid.
Perhaps ASIC should admit that they have got it completely wrong by targeting a few easy target risk advisers instead of going after the insurance and banking senior executives who have been the cause of the main financial scandals. But then it was always easier for ASIC to slap a minimal fine on the organisation, showboat a couple of scapegoat advises and let the senior execs get off scott free just in case of a future job offer.
Professional Associations don’t get payments from product manufactures which ultimately can be construed as influencing their policy and standards. The FPA via it’s professional partner program receives payments from Comm Financial Planning to help influence and shape advice according to the FPA. These fees are then reported as members fees. This would be equivalent to the Aust Medical Association getting payments from Pfizer a drug manufacturer and then lobbying the Govt. The AMA and State based organisations do not tolerate these relationships.
Just who is the FPA representing here, planners? Australians? CBA advisers or CBA itself?
FASEA is not going to accept anything from the FPA when it’s key business partners are before the Royal Commission.ASIC is 100% spot on saying there are no professional associations. He is correct and we’re being buried in compliance and red tape because of this.
Comments are closed.