Mixed Support for ‘Two Strikes’ Compliance Breach Policy

Would you support your licensee if it implemented a 'Two Strikes and You're Out' policy on failed adviser compliance audits?

  • No (51%)
  • Yes (31%)
  • Not sure (17%)

A mixed result in our latest poll may suggest this question has more shades than a black-and-white answer.

As we go to press, almost half of those voting in our poll (47%) do not support a ‘Two Strikes and You’re Out’ compliance policy for their own AFSL (see: ANZ Puts Advisers on Notice). At the same time, though, 35% would support this policy for their licensee, while almost one in five (18%) are unsure.

Comments offered by two advisers may have encapsulated the issues surrounding this question; those issues relating to the nature and/or seriousness of the compliance breaches themselves.

For example, Canberra adviser, Katherine Hayes, makes this valid observation:

If you failed the best interest test, certainly [two strikes]. But if you fail an audit because there is a date missing next to a signature or some other administrative errors, that would be wildly inappropriate.

Elsewhere, regular commentator, Jeremy Wright, made the point that in developing compliance policy, any licensee must first have a solid perspective on why its rules are in place, how those rules were meant to improve things and what the end result was supposed to be.

…most advisers might probably support a ‘Two Strikes’ policy, as long as the degree of the compliance breaches was significant

If we applied one interpretation that takes into account these comments and the poll results so far, it might translate into the fact that most advisers might probably support a ‘Two Strikes’ policy, as long as the degree of the compliance breaches was significant. If the breaches were minor, however, we’d suggest there would be little support for the policy.

We wonder, therefore, about the fine print that surrounds ANZ’s ‘Two Strikes’ policy for its bank advice network, and whether it may indeed make allowance for degrees of severity in relation to the compliance breaches.

In any case, our poll remains open for another week as we encourage you to add your own take on this key issue that has arisen following the revelations at the Banking Royal Commission. Cast your vote and tell us what you think…

  • Ken

    Surely it the complexity and the nature of the breach that needs to be accessed when one is found
    Some auditors seem to look for anything to substantiate their existence typo’s etc
    We often read about an adviser who was banned for not investigating his clients needs correctly ? And at the end it also states he or she also embezzled several million dollars from their clients accounts
    Depending on the outcome of the advice they both are a breach but which one would the everyday person feel is the worst?
    Maybe grading of offences like rugby league ??
    It’s a difficult one to just come up with strike two your out !