After early days of shock and horror, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is getting down to the less-sensational but equally important questions of how the big institutions manage complaints about their advisory businesses once they emerge.

Often, like listening to a crashed aircraft’s black box recording, it doesn’t reflect well on the people in the cockpit.

It’s clear that there is no straight line at all between uncovering a problem – such as NAB’s discovery that 325 staff members had faked initials on beneficiary nomination forms affecting 2520 clients – and taking action.

MLC boss Andrew Hagger saved himself and NAB much grief on Monday by admitting NAB had made a mistake in leaving six months between catching a miscreant initial-squiggler red-handed and reporting him to the Australian Securities and Investments Commission.

Hagger memorably noted that in between the financial advice provider and ASIC were professional bodies such as the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA).

Also, financial advisers whose conduct was being investigated by one of those intermediaries could always pack up and “go down the road to another association”.

In recent days, the commission segued to evidence about financial adviser Sam Henderson, who until recently had enjoyed a high media profile via his regular appearances on Sky Business and as a superannuation expert in Weekend AFR.

Early on, he admitted that his company’s Financial Services Guide issued on January 20, 2016, stated that he had a master’s degree in commerce, when, in fact, he didn’t, and that set the tone.

This was another example of the commission using a particularly egregious case, involving a high-profile adviser who clearly fought hard to keep his troubles out of the public arena, to illustrate the woolly way in which bad behaviour in the industry is sanctioned – or, perhaps more correctly, isn’t.

Henderson’s career crashed to earth after he admitted he had given totally dud advice to Fair Work Commissioner Donna McKenna in 2016, and that one of his employees had impersonated McKenna in a bid to find out the status of the superannuation accounts Henderson had erroneously suggested she roll over into a self-managed super fund.

The employee, who was not sacked, was told twice that McKenna would forfeit $500,000 in deferred benefit if she pulled out early from the funds.

Henderson’s company, Henderson Maxwell, not only offered financial advice but also had an accounting arm that earned fees from setting up SMSFs.

The AFA had previously awarded Henderson Maxwell the title “Practice of the Year”.

Fortunately for McKenna, she rejected the advice, quite reasonably calling it “risible” and the fee she had paid was refunded.

Of all the clients Henderson might have picked to offer an inadequately researched 15-minute advisory session, McKenna was clearly a bad choice. She was a well-informed lawyer who kept notes of what she was told, and who made a complaint to the FPA that, more than a year later, is still unresolved.

As she put it, “If someone with my educational background and occupational background hits a wall when endeavouring to engage proper disciplinary processes, what hope would someone who has not [this background] have?

Much of yesterday morning’s evidence was a spar between the commission’s Rowena Orr and FPA chief executive Dante de Gori, about the FPA’s disciplinary system, and why the man investigating the complaint against Henderson, Mark Murphy, moved to another job not long after the FPA ignored his recommendation for tough action.

What emerged was that he had recommended formal disciplinary proceedings, via a panel, against Henderson, whereas the FPA proposed what is called “summary disposal” of the complaint, a much less aggressive process that involves an agreed statement.

Doesn’t that sound like one of ASIC’s wet lettuce-style enforceable undertakings?

This lit something of a bonfire under De Gori’s chair, particularly as he revealed that even if someone is expelled from the FPA, that didn’t mean they would automatically lose their licence to provide financial advice.

When Orr asked whether that was correct, he responded, “Absolutely, yes.’’

De Gori also said it was not obligatory for the FPA to publish the name of a member found to have committed a breach under that “summary disposal” process.

And he admitted that, so far, the FPA has decided Henderson will be “admonished” and that he would have to pay out all his outstanding FPA membership dues.

“What kind of penalty is that?” Orr asked.

All of which indicates that, as Orr suggested and De Gori rejected, the organisation might be seen as more concerned about looking after its members than the interests of their clients.

Planners won’t need reminding that we will have a long way to go yet before they can once again tell the people they play golf with what they do for a living.

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