The Australian Securities and Investment Commission (ASIC) has has made the first move to clean up the financial services sector with a register of qualified financial planners going live on its consumer site, Moneysmart.gov.au.
The register, which was a recommendation from the report of the bi-partisan Senate inquiry that reviewed the Commonwealth Bank’s financial planning scandal, went live yesterday. It includes the adviser’s name, registration number, employment history going back five years and the licensee under which he or she operates. Details of who owns the financial services licence, including the company, which employs the planner, are also included. And while details of the products the planner is licensed to advise on are included, qualifications, completed training courses and professional memberships will not be added until the end of May.
Although the ASIC registry contains 19,000 planners who are licensed to provide advice on investments, superannuation and life insurance, there are planners who have not yet applied to be on the register. The information provided is essentially unregulated, with planners on the register providing their own details. Consumers will have the responsibility for checking that their chosen planner is listed and that the details provided by the planner are indeed correct.
While the register reveals any disqualification, banning orders or enforceable undertakings, it does not list details of planners who are still working in the field despite being known by employers to have been involved in undesirable practices.
Assistant Treasurer Josh Frydenberg said the register was a “major step forward” for the financial services sector. “Having the ability to go to a single register of financial advisers to verify the status and credentials of a particular individual will give consumers greater confidence in the adviser they choose. It will improve transparency and accountability in the financial advice sector,” Mr Frydenberg said.
Further fields may be added to the register with Mr Frydenberg stating, “The Government is currently considering a Parliamentary Joint Committee report, which includes recommendations for further enhancements to the Register.”
Read ASIC’s media release.
Take a look at the register on Moneysmart.gov.au
Opinion: Consumers being misled
I’ve always loved the phrase ‘like putting Dracula in charge of the blood bank’ and ASIC’s register of financial planners is the perfect example of what this means.
Granted, the information provided is only half complete, with details of qualifications and professional memberships to be added by the end of May, but given that it is up to the planners themselves to provide their details, what is the point? ASIC does not check the information, only having the power to fine a planner if the information is found to be incorrect. A fine of up to $76,000 can be enforced by ASIC, but given that those stung by a financial planning scandal often lose much more than this, it really isn’t much of a deterrent.
Consumer confidence in the financial planning industry is at an all time low and this register simply provides a false sense of security for those who don’t fully understand the limitations of the information.
Jeff Morris, a Certified Financial Planner (CFP) and the man who blew the whistle on fraudulent practices within the Commonwealth Bank wealth management division, is also concerned about the implied security to consumers. Speaking yesterday on Radio National, Mr Morris said:
“As usual the devil is in the detail, and this register was very much a kneejerk response by the government, a very, very quick response I guess to try and give the appearance of addressing deeper problems in the industry, and it suffers from that because it’s been implemented very quickly.
“So for example it doesn’t include details of employment history beyond five years, so a planner who was with Storm Financial more than five years ago won’t have to disclose that fact, which would be of interest to most consumers I imagine.
“The problem with the industry is that most of the advisors, most of the rogue advisors in the industry have never been banned or disqualified, because the licensees haven’t made reports to ASIC, breach reports to ASIC, and in cases where they have, quite often ASIC hasn’t taken any action.
“So the best example of that is the recent NAB financial planning scandal, where 41 planners have been bad enough for NAB to sack or move on in the last five years.
“Only eight of them had breach reports filed with ASIC, and it looks as if ASIC didn’t take enforcement action against any of them.
“So none of those 41 planners who are bad enough for NAB to get rid of will show up on this register.
People who think this is going to be a clear guide of advisors to avoid, are being given a false sense of security.”
Listen to Jeff Morris speak with Fran Kelly.
The one thing the register will do is highlight any alignment that smaller planners might have with large planning groups, such as AMP.
Doing something is obviously better than doing nothing, but giving consumers a false sense of security in their choice of planner is in itself deceptive. Despite the bipartisan inquiry calling for a royal commission into the Commonwealth Bank financial planning division, further investigation into Macquarie Bank’s financial planning issues and an overhaul of the Australian Securities and Investment Commission (ASIC), such recommendations were rejected, in the contention that the national register is sufficient to tighten loopholes in the deeply flawed financial planning industry.
What do you think? Would you feel more secure choosing a planner from the official register? Do you think it’s right that the onus should be on the consumer to check a planner’s credentials? Is enough being done to clean up the financial planning industry?
