Banks failed their customers because they believed in their own immortality, former Australian Liberal Party leader Peter Costello told 1400 attendees at the opening of the Financial Planning Association’s Professionals Congress in Sydney on Wednesday evening.
“This isn’t a story of where banks fell into disrepute because they failed, it’s a story of them falling into disrepute because they failed their customers,” Costello said on stage in conversation with Money magazine editor Effie Zahos. “They came out of the [global financial] crisis unscathed and they started to believe in their own immortality and lost sight of their customers.
“Here we are, 10 years down the track [from the global financial crisis] and [the banks] are more on the nose than ever. I think what happened is the regulators were asleep and the banks treated them with disdain.”
The comments from the former treasurer in the Howard government from 1996 to 2007 weren’t out of place alongside the speeches delivered by FPA chief executive Dante De Gori and the association’s incoming chair, Marisa Broome, both of whom gave a nod to the challenges the industry faces amid the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and new education standards from the Financial Adviser Standards and Ethics Authority.
“The FPA is not perfect and there is much to do,” De Gori said during his opening remarks.
He defended the FPA’s position on adviser education standards.
“The need to raise standards is unquestioned and the FPA does not apologise for leading the change,” he said. “Ever since the publication of an article with the headline, ‘It’s harder to become a qualified hairdresser than to become a qualified financial planner’, it was clear that we needed to change. I would ask you to elevate from what does this mean to you personally and ask yourself what does this mean to the profession.”
Like everyone else, the FPA is digesting new standards and legislative instruments as FASEA continues to follow its own schedule in publishing the standards.
“We will see further details around the legislative instruments on the new education standards come out,” he said.
De Gori highlighted the challenging environment advisers were faced with, given the changes taking place in the world and the industry around them.
“We have a new prime minister, a new financial services minister, a change in the FASEA CEO, a change in the ASIC chairman; we have a transition to the new AFCA [Australian Financial Complaints Authority] regime, and a royal commission, while along the way trying to bring in new education laws,” he said.
Amid increased scrutiny and, very probably, increasing regulation, Costello had a word of advice for the practitioners and business owners in the room should they have to work with the likes of ASIC and the Australian Prudential Regulation Authority.
“The banks learned it’s much better to deal with criticism early in the piece than to dig in and deal with it later when it’s a bigger problem,” he said. “If the regulator knocks on your door, they may be bureaucrats, but it’s better to give ground early on.”