Every day that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry sits, more and more examples of Australians suffering financial loss due to the investment and financial services sector are uncovered. As a result, shortcomings of the whole sector are becoming evident.

The ABC radio show PM recently featured an interview with barrister James Wheeldon, who worked with ASIC in 2004 and 2005. In the interview, he said he thought his job as a junior lawyer with the regulator was meant to be about enforcing the law, but he “saw ASIC literally changing the law, amending the Corporations Act to benefit the banks and the lobby groups for the banks”.

Of even greater concern for Australian investors, who are meant to receive some protection from ASIC, was how closely Wheeldon’s statements suggested the regulator was tied to the companies it was meant to regulate. Wheeldon, when he appeared before an earlier Senate inquiry into ASIC, advised that while working there he was required to report to a more senior lawyer who was on secondment to ASIC from MLC.

As to ASIC being able to get its own house in order, without intervention from the government and despite a number of different chairmen, Wheeldon was not hopeful. He said “many of the senior people within ASIC are people who have perpetrated this culture of acquiescence and subservience towards the banks”.

If ASIC is not acting as effectively as it should to ensure the big banks and large financial institutions are meeting their obligations initially, investors are at least supposed to be able to have some faith in the complaints process when planners provide advice that is deficient and against their best interests.

A recent case the royal commission heard, about an employee of a high-profile financial adviser impersonating a client to obtain information, and the adviser recommending that client roll over their superannuation into an SMSF that would then be invested in managed funds the adviser’s business operated, is an example of how complaints are not dealt with properly.

The client estimated that had she followed the advice, it would have resulted in her forfeiting $500,000. So, she lodged a complaint with the Financial Planning Association, which, among other things, is meant to discipline members who provide conflicted and/or substandard advice.

Given that the FPA Code of Professional Practice includes placing the client’s interest first, providing professional services with integrity, and acting in a manner that demonstrates exemplary professional conduct, the expectation would have been that the complaint against the high-profile planner would have been dealt with efficiently and quickly.

Instead, the complaint, which was lodged with the FPA in March last year, still has not been finalised. In addition, the FPA appears to be concerned with placating the high-profile member.

It is not surprising that the FPA has been found wanting in this instance with regard to its complaint procedures. The organisation’s last three chief executives worked for large financial institutions before being appointed to that role.

None of the major political parties can hold up their heads with regard to the neglect and contempt with which Australian investors have been treated. The Coalition Government’s initiative of passing legislation that requires financial planners to have a degree and setting up the Financial Adviser Standards and Ethics Authority (FASEA) will do little to improve professional standards.

One need look no further than the legal and medical professions to realise that requiring a practitioner to have a degree does not ensure that clients receive the best advice and are not exploited.

Given the above example of how the FPA dealt with a complaint, the government should give serious consideration to FASEA having responsibility for administering an independent complaints system.

If the federal government is serious about ensuring the quality of financial advice, it should also mandate extensive, rather than limited, approved product lists, and advisers should be required to demonstrate how the benefits of their investment recommendations exceed the costs.

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Max Newnham has worked in public accounting for almost 40 years. He is a financial planning specialist with the Institute of Chartered Accountants and a specialist adviser with the SMSF Association of Australia.