All financial planners who exit National Australia Bank Wealth (NAB Wealth), and the reasons for their departure, will be reported directly to the regulator – a first for the sector – according to the head of the bank’s wealth operation.
The measure is aimed at weeding out ‘bad apples’ from the overall sector, exceeding the minimum standards set by the new Financial Adviser Register and existing legislation. Andrew Hagger, NAB’s group executive – wealth, announced it as he appeared alongside his CEO, Andrew Thorburn, at the Senate Economics References Committee inquiry on the Scrutiny of Financial Advice.
Hagger elaborated further after addressing an American Chamber of Commerce event in Sydney yesterday, revealing it will extend beyond NAB Financial Planning to cover the bank’s entire financial advice network.
“It’s broader than NAB FP, [extending] across our aligned advice networks of about 1,662 advisers,” Hagger said. This network of Australian Financial Services licensees includes MLC Financial Planning, Garvan, Godfrey Pembroke, Apogee and Meritum Financial Group.
“When an adviser departs our network, we will inform ASIC as to our categorisation of the reasons for their departure. And that’s a higher bar than the Financial Adviser Register…which gives a very useful set of information, but doesn’t go quite to that level,” Hagger said.
He stresses that NAB already complies with statutory obligations around breach reporting to the regulator, which are contained under Section 912D of the Corporations Act.
“But from a public perspective, it’s not always understood that because an adviser leaves and an issue has occurred, that doesn’t necessarily trigger a breach report, which are for the most significant matters,” Hagger said.
He estimates 90 per cent of the compensation NAB Wealth has paid to clients past and present relates to advisers who have been the subject of breach reports.
The adviser register enables information to be made available about an adviser who has been disqualified, and Hagger again emphasises NAB Wealth is compliant with that process.
“What we’ve said…which is unique to us, is that we will advise ASIC of all advisers who depart our network…and we will provide ASIC with our categorisations of the reasons for their departure. That takes the form of us writing to ASIC on a regular basis to provide them with that information.”
Hagger said the bank would meet with ASIC periodically, though details about the frequency of these meetings and the systems NAB will need in place are yet to be established.
Back to the drawing board
He also spoke about the issue of life insurance advice and the widespread outcry that has greeted the report handed down by John Trowbridge, chair of the Life Insurance and Advice Working Group (LIAWG), of which Hagger was a board member.
Hagger said the industry is “hearing loud and clear” the recent comments from the Assistant Treasurer Josh Frydenberg about the need for a response in a matter of weeks, not months.
Commenting on the overwhelmingly negative response from practitioners, he said: “The industry is equally unhappy [with it], there are some elements that various businesses like, and other elements they don’t like.”
“We did appoint an independent chairman for a good reason, and that was to get that element of fairness and to get that independence going across all of the submissions, and [Trowbridge has] made his report.
“We now have the Trowbridge report and the FSI findings. As an industry we’ve got to work our way through this quickly, we know that,” Hagger said.
“And you’ll find our organisation playing our part in trying to make sure we make the right choices as an industry to provide much-needed reform.”