- No (76%)
- Yes (21%)
- Not sure (3%)
Our latest poll suggests advisers much prefer self-regulation to government intervention when it comes to setting standards for their competency and conduct.
As we go to press, 74% of respondents have voted ‘no’ to the question of whether they support the creation of a Government-led body to oversee adviser competency standards, education and professional conduct. However, 23% support this notion, while 3% remain undecided.
This issue has been raised recently by the Financial Services Council, where it argues that industry self-regulation of adviser standards has not worked (see: Advice Sector Can’t Self-Regulate).
The general tone of adviser responses to the FSC’s call for government intervention was that self-regulation of adviser competency and conduct standards is already working, and does not need to change. It is:
“… a proven model that is not broken.”
Another adviser makes the point that government intervention will do nothing to stop the ‘bad apples’:
“The implication … is that high standards and regulatory requirements in terms of client treatment do not exist. On the contrary, they do. The issue is that on occasions, some people do not adhere to them and no amount of shuffling overseers, legislation, auditing etc will stop those people existing and trying to get away with something.”
There also appears to be an element of weariness and fatigue setting in with many advisers when it comes to the ongoing debate surrounding adviser competency and the rules and regulations addressing the advice process. Possibly representing the majority of his peers, one adviser succinctly summed up the current debate:
“As an ethical adviser with over 20 years experience – I am so over it.”
See last week’s poll article for a summary of the pros and cons of government intervention on adviser competency and conduct, and then let us know your own thoughts, as our poll remains open for another week…
No surprises there – Most convicts would be happy playing warden too.
What is the goal here really?I think we all know ASIC want to be rid of advisers,planners,agents,brokers and anyone else connected to the financial services industry.
When they have decimated the industry and forced many good people out will they have achieved their goal?
The bad apples will eventually flush themselves out and the weight of the law should fall on them,BUT,why do good operators need to constantly pander to ASIC for over 25 years,that I know of.
ASIC should increase the penalties instead of tinkering with things they can’t control.
If reforms make clients pay advisers directly out of their pocket for organizing appropriate insurance, at least two things could happen that are not in the best interests of a client:
1. The client will be worse off – They will have to find the funds to pay for decent advice, or they will work it out themselves & possibly not end up with appropriate cover. Maybe call centre operators will be advising them based on partial information – they can’t possibly get all the information to ‘know their client’. So if people aren’t appropriately covered, they will fall short when it comes to managing medical costs etc in the event of a claim. The health system will have to pick up that slack. Or there is always ‘gofundme’.
2. The insurance companies will be have to be making more profit, or reducing their premiums if they aren’t paying the people (advisers) who sit in front of their clients and do their legwork for them.
There is an unscrupulous practice called ‘churning’ that some operators within the insurance industry do – changing insurances to get the upfront commissions again. But why wouldn’t people regularly check in with their planner to see if they can get a better deal on their car/home/life insurance? I would. The problem with doing this with life insurances (which includes Life, TPD, income protection & trauma) is that equivalent cover might not be offered with another insurer, especially as health problems emerge with age. An insurance salesperson is only interested in the sale, not the effect on the client, so of course they will sell them a new policy without considering the full financial ramifications to the client. A good planner will do what’s best for the client. Financial reforms so far haven’t made unscrupulous operators honest, and I agree with Scott that the penalties should be increased & bad apples thrown out.
Yes, I’m a financial planner. At the moment I can see a client and substantially keep the out of pocket cost down for the client because I am paid by the insurance company if I organize insurance for them as part of my overall planning services. There are times when I don’t charge the client because the payment I receive from the insurance company for organizing the insurance covers the other services I provide. For example, if I consolidate superannuation accounts, set up investment strategies in super etc, and I don’t organize insurances, then I have to charge the client the full amount to cover my time. If I organize insurance for them too, then I can package it in, and save the client money. Surely everyone’s happy with that
There is a lot of behind the scenes work involved in organizing insurance for someone. There is the research to find the most appropriate amounts and types of cover (based on life stage, age, sex, occupation etc.), the fine tuning of optional extras to suit each client, the consideration of the most tax-effective way to pay the premium, application forms, the medical follow ups.. conversations & meetings with the clients and insurers.. the list goes on. Oh, let’s not forget the cost of the red tape that ASIC impose for our record keeping, compliance, and ongoing training requirements.
So if the insurance companies can’t pay me for doing all the legwork for their new client (which often is less than I would charge on an hourly rate), then the client will have to find the cash out of their pocket to pay for this. Or do it themselves. How many clients will end up with the most appropriate cover, both in terms of what they are covered for and the premiums?
Are they so afraid that the average person will get good, affordable, advice that they want to set it in reach only of those who can afford to pay for it out of their after-tax earnings?
Try charging a prospective life insurance client $300 on top of an annual premium of say $1000 and see what happens.? 9 out of 10 people will say thanks but no thanks. It is still unfortunatley all about the ‘money” for most people not the quality of the advice.
Hence so many people ring the “online” insurers get there quote {usually an amount worked out by them } and never the right amount of cover let alone advice.
Watch the courts fill up with disgruntled policy holders who had no idea that it was cheap because it only covered a portion of what they wanted it to. Who will they blame then the insurer’s ?? as there wont be any advisers left to take the fall.
What price does that come at ?
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