A royal commission inquiry into the role of the banks should specifically exclude financial planning, and responsibility for losses suffered by investors should be borne by a broader group than just financial planners, according to the chief executive officer of the Financial Planning Association (FPA), Dante De Gori.
Speaking at the FPA’s national roadshow event in Canberra last week, De Gori said politicians should recognise the scrutiny financial planning has been under for the past seven years and respect a plethora of hearings, reviews and inquiries that have taken place that have already led to significant legislative and regulatory changes in the sector.
He said a royal commission inquiry into the role of the banking sector should not focus on financial planning, despite the banks’ ownership of a significant part of the advice industry.
“The FPA has not been supportive of the royal commission,” De Gori said.
“However, in saying that we have also pointed out that if you think about a royal commission, there’s been quite a number of reviews and inquiries already that we think should not be ignored – 54 instances of inquiries over the past seven years; 54 that have either directly or indirectly been about financial advice.
“I think that’s staggering: 54 inquiries.”
Enough already
De Gori said it is simply incorrect to believe that “nothing is happening or nothing is changing” as a result of those inquiries and reviews.
“That has resulted in five pieces of new major reform initiatives and legislation that are either in place or about to come into place,” he said.
“We can’t stop it if Labor does win the election and decide to do a royal commission. But it is important to note the FPA’s position on this is to say, well, if you want to do it on the banks that’s one thing, but it should not be about financial planning because there’s been 54 instances of reviews and inquiries that have happened on this already.”
De Gori said that while there has been “a lot of noise, a lot of stories and a lot of media surrounding failures of financial advice, in some cases very much warranted”, other “gatekeepers” in the industry should also take responsibility for the roles they play.
“Financial advisers – yourselves – are one part of the value chain,” De Gori said.
“There are product providers; manufacturers; there are directors; there are auditors; there are managers. There are people involved in the value chain that cannot remove themselves from their obligations in terms of those products that are placed in the market – products that are advocated to you and those products that are sold to consumers.”
Accountability
De Gori said the FPA is “very strong in ensuring product manufacturers are accountable and other gatekeepers are accountable for their role in any products that are developed, and in particular when those products fail”.
“If you think about a number of problems that have occurred in the industry, financial advisers through the FOS [Financial Ombudsman Service] process have been contributors financially to compensation, but what role do directors and auditors and others play in terms of compensating consumers?” he said.
De Gori said holding others to account would be “a very important initiative of the FPA going forward”.
