Push for financial ethics training

Two of the big banks have called for ethics education for planners.

Push for financial ethics training

In a move to try and clean up the financial planning sector, two of the big four banks have made a submission to Treasury recommending ethics education for planners.

ANZ and BT Financial Group, which is owned by Westpac, have given their support to a new proposal that would see all planners undertake a course in ethical conduct.  BT’s submission would see newly qualified financial planners undergo education in ethical conduct in their first year of practice. Existing planners would have to complete the training within two years of it being introduced.

ANZ has said it would work closely with industry groups and the St James Ethics Centre to develop a curriculum on "ethics and responsible decision making" in the industry. "ANZ agrees that promoting an ethical culture and ethical behaviour is a core part of any profession," it said.

The big four banks, along with AMP, dominate Australia’s financial planning industry and have been the subject of numerous planning scandals. Calls for a Royal Commission into the sector have been rejected by the government, but a parliamentary joint committee on corporations and financial services has produced a number of recommendations. The banking industry is supporting several of the recommendations, which include new minimum qualifications for planners, compulsory exams and establishing a new standards-setting body.

The recommendations from the committee’s report, which was delivered in December, are being considered by Assistant Treasurer Josh Frydenberg. who last month said he expected “transformational” changes to financial advice to be made by mid-year.

Read more at TheAge.com.au

Opinion: More upheaval won’t help

Consumer confidence in the financial planning sector is already battered and bruised and a new raft of changes won’t help the situation.

For an industry, which controls the financial futures of most Australians, to suddenly realise that ethics education is required for those providing advice is preposterous. Surely ethical practices are every bit as important as sound financial knowledge when advising people on how best to secure their financial future? Sadly, it seems not.

Last week it was reported in a submission by consumer groups that $12.9 million of compensation ordered by the Financial Ombudsman Service had not been paid – a key reason being the licensees were insolvent. Little comfort to those who have lost their life savings.

The government’s attempt to water down the Future of Financial Advice (FoFA) reforms, only to have legislation overturned at the last minute not only caused great confusion amongst consumers, but also showed that it was not in the least bit interested in holding to account the money spinning financial advice sector. And its feeble attempt to create a register of planners, only to exclude key information and have no one checking or correlating the information which planners themselves input, pays only lip service to the parliamentary joint committee recommendations.

There is no doubt that the industry needs an overhaul, but providing ethics education to those who are paid, and paid well for a service is, quite frankly, laughable. You can’t teach ethical behaviour – you’re either ethical or you’re not.  It’s time to stop implementing changes for change sake, changes that only lead to consumer confusion and give less ethical planners another means by which to fleece people of their hard-earned cash.

Recommendations from a committee and submissions from those with a vested interest are not in any way sufficient to fix the flawed financial industry. It’s time to stop mucking around and grant a Royal Commission into the systemic failures of the industry. Then, and only then, will the government be in a position to make a real and lasting difference.

Do you think small changes help to address certain issues in the financial planning sector? Are you confused by changes to financial planning legislation? Should the big banks have a say in how the industry is regulated?





    COMMENTS

    To make a comment, please register or login
    stekmer
    11th May 2015
    10:09am
    I agree with the Opinion: section.
    If you dont know that its wrong to advise people to make decisions that are in your interests and not the person paying you - then your a scammer, not a planner.
    This so called profession lacks the morality of your average criminal group.
    dougie
    11th May 2015
    11:00am
    Are you saying Debbie, that what we have is good enough. It is wide open to abuse and misuse as many people will confirm. The whole system banks and all should be overhauled by people not involved with the system. People who are system auditors and those who have experience in fraud prosecution. There must be a contingency for any who do scam money from people to have a fund for compensatory payments to repay those funds taken. Most of all there should be a very tight system of regulation and regulatory licence for those who wish to operate as a Financial Advisor. There must also be long gaol terms and confiscation of property for those who operate without a licence. This confiscated property or funds could be directed into the compensation scheme for payment to those scammed. Be as tough as you can on these scavengers on their fellow citizens.

    11th May 2015
    12:10pm
    I think that banks should become involved only when they sponsor superannuation funds. All superannuation funds should be made to have stricter control and regulation of their advisers, be they fund employees or dependently employed. All financial advisers should be licensed and indemnity insured and annually verified by the superannuation provider. All complaints of a financial adviser made to a provider should also be reported by the provider to a central superannuation controlling board or body so infringements of a superannuation contributor by a financial adviser can be monitored and abuses controlled in a timely manner to prevent being repeated by the offender. A perfect situation is pretty hard to obtain, but a better one is possible. Good luck all.
    LiveItUp
    11th May 2015
    12:20pm
    If the GFC had not happened then this would not be an issue. People need to take responsibility for their own financial decisions and stop blaming their advisers because the markets change.
    MB100D
    11th May 2015
    2:14pm
    Sorry you are totally wrong.
    People go to financial planners because they do not have the knowledge to effectively manage their financial affairs. The Planners are paid to provide the best advice and structure the financial plan with the best interest of their client, not their own interest. Planners are under enormous pressure to sell their banks or other finacial insitutions product regardless of impact to their clients, then they have their interests/greed making it worse.
    This issue never happened due to the GFC, it's been a problem for as far back as I can remember. I studied the Financial planning couse through Deakin UNI back in the late 90's. Part of the course required me to investigate 4 Planning organisations and comment on their practices. The result was not pretty, I found incompetence and down right self interest.
    People go to planners and pay an enormous amount for their advice. Part of the process in developing a plan is to develop a risk profile of the client and structure the plan to match.
    I don't need to engage a planner, I haven't found one that is worth the fees they charge or the advice they provide.
    Using your logic if you go to a Doctor and he gives you bad advice and the wrong medication that causes you major medical issues, you should have taken responsibility for your own medical decisions.
    LiveItUp
    11th May 2015
    4:09pm
    Doctor's too have big incentives to subscribe certain drugs which may or may not suit the patient. If I hadn't taken personal responsibility for my own health care I would have left this moral world a long time ago. Before you taken any drug do you read the instructions and all about it first? I have refused to take drugs as I didn't think that hey were suitable for me. Same thing with financial products before you invest in them read and understand what you are investing in. If in doubt stay out.

    Prior to the GFC I had people telling me that they have mortgaged their house and invested in products with double or triple digits returns. They just couldn't understand why I wouldn't do the same even though they knew the risks involved. Their belief was that it wasn't going to turn out any way but like a goose that kept laying golden eggs.

    I too studied financial planning and the best advice I could give any one was that why take advice from anyone that hadn't done what they advised? If they had done it and prospered why would they still be a financial planner? There in lies the problem.
    MB100D
    11th May 2015
    4:39pm
    You are missing the : If a Doctor gives you bad advice, contrary to your needs, you can sue for mal practice. You should be able to take legal action against Financial Planners that set you up with a plan that is not suitable for you and your financial position. You PAY them for their expertise (Doubtful as is mostly is) and the assumption that they work for your best interest.
    What has been revealed in the latest battles with some banks and their planners is that they were involved in FRAUD.
    If you studied financial planning you should know better.
    LiveItUp
    11th May 2015
    6:28pm
    Sue doctors for bad advice oh I wish.

    If you agree to a plan then it's up to you to make sure it is suitable for your circumstances. I don;t believe banks were involved in Fraud it's just easier for them to settle out of court.

    Why should a financial planner be responsible for what he can't control? Market conditions or what happens to the money in those managed funds they tend to put their client's in. They have no control over them at all.
    Lookfar
    11th May 2015
    12:38pm
    I was currently told by my Credit Card and my Debit card that I was eligible for increased
    funds, but then when I applied, it was rejected, - I had been a long term faithful customer of ANZ, have my house on the line for a 10% of it's value housing loan, never missed a payment, so when I had an opportunity to make a couple of grand the which required 1G, it was rejected because of a false overcharge from Sensis, the which alleged debt had been bought by Baycorp, who had without any proof registered me as a bad credit whatever.
    This sucks, surely ANZ has a duty of care to advertise financial products that are real, like real, and I would think, also to value long term customers above such gangs of thieves as baycorp, Arguably the scum of the earth!!
    Oldchick
    11th May 2015
    12:47pm
    I would trust my Financial Planner with my last cent and have used him for years. He will never alter anything in my portfolio without first running it past me but more importantly without making sure that I fully understand what he is doing and why. I consider myself very lucky to have him on my side but unfortunately a lot of people haven't been as fortunate. You're completely correct. If they are not ethical to start with all the training in the world isn't going to change that. There are always those people who think they can get away with pulling the wool over the eyes of people they are supposed to be helping and supporting. It's a sad fact of life that you can't teach common decency.
    Lookfar
    11th May 2015
    1:02pm
    Financial organisations have obligations to their shareholders, - no one else, period.
    Personal stuff is fine but disappears like early morning mist when any sort of problem appears, - that is where the legislation is required.
    They want your money, but don't want any responsibility.
    BeezNeez
    11th May 2015
    1:38pm
    ...Lookfar.... Many fin. planners are small businesses or individuals working in tandem with others with complimentary skills. To suggest that they all have an obligation to shareholders is simply non-factual. However, I still believe a huge broom needs to sweep through the industry. Small planners and large will have different mindsets. The the 'ethics' of the medium to large firms are those that create the most concern IMO. The idea 'am I helping my client or myself' seem very shady in many of those companies. We had a finanancial planner for years who we always felt comfortable with and trusted implicitly. But when he retired we looked elsewhere and found a co. that seemed to have a good record and took our business there. They have done some really good things, however they've also earned thousands and thousands of dollars by having so many related business and also convinced us to buy property in an area we would NEVER in our wildest dreams considered before meeting them, said property made them a motzo, cost us a good penny and wasn't what they virtually promised, indeed TOLD us we had to get. Having been sideswiped (thinking 'it could never happen to us') I can see how easily these organisations can do what they do, it's all smoke and mirrors. No care in the end and certainly no responsibility. The saddest part of all this, our retiring fin planner advised against the property purchases of the new advisors. Don't get me wrong....we aren't ruined, but had we invested the same $ in a property in Sydney. at the very same time, we could have made a couple hundred thousand on it by now and been charging at least $50 a week more. AND no doubt we would have been in there buying another property by now, instead we missed the Sydney boom (which is where I wanted to put our $). Poor advice from our wealthy advisors!!!
    stekmer
    11th May 2015
    2:44pm
    You sound very fortunate Jansview - to have a financial adviser that is totally upfront about the money they make from up front commissions, trailing commissions, incentives and, kickbacks that they receive when you act on their advice is both fortunate and rare.
    If you are fully aware of all the money that your adviser receives because of what they recommend to you, the limitations that their affiliations place on them in what they can recommend - and - you are comfortable paying this and being limited by their affiliations - then, why not.
    I'd suggest that few financial advisers are as upfront, open and honest as you describe yours - if in fact, all the information usually hidden is made open.
    cookie47
    11th May 2015
    1:08pm
    A lepord wont change his spots even with a course.
    Just give them bigger crystal balls.
    Patriot
    11th May 2015
    1:52pm
    After a dog has been "squatting" for a P for some years it is impossible to teach him to "cock" his leg to achieve the same result..
    No difference with "Greedy Crooks".
    gilstamp
    11th May 2015
    2:16pm
    We need screening for psychopathic tendencies for all applicants for ANY position of responsibility. This includes politicians, bankers and any supervisory capacity. The social restraints have been taken off and ignored in this era, to the detriment of ordinary people who have no means of recourse.
    Chris B T
    11th May 2015
    2:38pm
    Until the fine print of "I Take No Responsibility For The Advice Given" is Removed and made responsibile for the BULLS!!! given then nothing has changed.
    The other one USED, THIS PERSON NO LONGER IS PART OF THIS FIRM, the FIRM SHOULD BE HELD RESPONSIBILE AS THEY BENEFITED FROM THERE BULLS!!!.
    stekmer
    11th May 2015
    2:46pm
    The basic fact remains unchanged.
    The only one guaranteed to profit from seeing a financial adviser - is the financial adviser
    James
    11th May 2015
    3:03pm
    If you are smart enough to actually give good advice then why the hell aren't you making a fortune investing your own or borrowed money. All these so called financial planers are nothing but scam artists
    LiveItUp
    11th May 2015
    6:41pm
    Agree if the advice you gave worked why are you still a financial planner?

    If only people would realise this.
    Vee
    11th May 2015
    3:10pm
    I don't know what all the fuss is about. All our banks are nothing more than legalized criminal organisations who employ so called financial planers to get as much as they can, charging exorbitant fees while investing in dubious business the hard earned monies of suckers like us and we either loose it fast or slow all depend how much they can spread our monies around. And the government - well most of us know they are not looking out for the little people like us - that's why all the top end and high rollers rarely pay taxes. So when it comes down to the government bringing in measures to protect us - the little people - forget it. They are too busy looking after the high end of town. If the last budget didn't open your eyes then I don't know what will. Be very interested in seeing where the hits will be in this budget.
    So is the government really concerned about fixing this problem, even fining the big bankers for what they got up to - I'll believe it when I see it. A cynic I am, but I still believe in fairies!
    Polly Esther
    11th May 2015
    3:18pm
    I blame Tony Abbott.
    stekmer
    11th May 2015
    3:30pm
    Why not - he's guilty of so many other things :-)

    Although, I think Mathias Conmann (not a typo) is more to blame for wanting to water down the rules governing financial advice.
    rratrr
    11th May 2015
    4:51pm
    Can I ask a simple question?
    If 5 of the largest financial organisations in Australia have admitted to poor behaviour on behalf of the financial planners they have employed in the last 10 years, that only leaves one, correct?
    I was a self funded retiree at 55 in 2007. I am now on a Centerlink pension at 62 and my retirement in ruin. Surely I am not the only victim of #6, or are they just better at sneaking under the radar of the Financial Service Inquiry and covering up people like me?
    Patriot
    11th May 2015
    6:50pm
    rratrr
    Being able to hold them legally accountable would fix the system in "One Foul Swoop".
    No "ifs-&-buts"
    lasaboy
    11th May 2015
    11:09pm
    I find this article very, very funny, two banks have called for it, yet NO banks have any ethics whatsoever
    [email protected]
    12th May 2015
    10:09am
    "You can’t teach ethical behaviour..." An interesting sentence. Ethics are moral principles broadly agreed on by a particular society, and as such certainly can and should be taught. Morality is actually living by those principles. The Law is an attempt to enforce ethical behaviour. It is interesting that rules we agree on are called "Laws", while other rules are described as "regulations". We accept for the overall good of society Laws should be obeyed, -but no one wants to be 'regulated'. Why do we still applaud behaviour in the marketplace that we abhor in all other social environments? Crazy to suggest a system based entirely on personal greed could ever lead to a 'moral' outcome.


    Join YOURLifeChoices, it’s free

    • Receive our daily enewsletter
    • Enter competitions
    • Comment on articles
    you might also be interested in...

    Retirement Planning

    When retirement planning becomes life planning it is a challenging, fun and fulfilling task.

    Age pension explained

    Anne explains whether you will qualify for an Age Pension and simplifies some of the more complex scenarios you may encounter dealing with Centrelink.

    Cruising

    Got the travel bug or need a break? Take a look at our latest Seniors travel discounts and deals.

    Meal Ideas

    Be inspired by our easy meal ideas. Search through hundreds of recipes to find the perfect one for any occasion.

    Trivia

    Have some fun and keep your mind active with our Daily Crossword, Trivia, Word Search and Sudoku Games.