The Financial Adviser Standards and Ethics Authority has firmed as a potential front runner to be the industry’s disciplinary body following new board appointments and recent comments by ASIC’s wealth management executive director.
The Liberal Party’s Stuart Robert MP announced two new appointments to the FASEA board of directors this week, both have strong backgrounds in consumer complaints relating to financial services.
Robert appointed Elissa Freeman, who is currently on the Australian Financial Complaints Authority board of directors, and was previously an Australian Competition and Consumer Commission director and also on the board of the Financial Ombudsman Service.
The Minister also appointed Louise Lakomy (pictured), who is a director of Crystal Wealth Partners, and who was previously a board member for the Financial Planning Association and a director of the Financial Ombudsman Service (FOS).
FOS was rolled into AFCA, which became the industry’s complaints service in November last year.
Lakomy told Professional Planner she was delighted to be appointed to the FASEA board. Lakomy said she hoped to draw on her more than a decade of corporate governance experience as well as her wealth management industry experience as a financial adviser. Lakomy also noted that in a previous career as an intensive care nurse she was one of the first within her cohort to complete a degree as that industry was transitioning to a profession.
Freeman and Lakomy replaced existing FASEA board members Michael O’Neill, who is the former CEO of National Seniors Australia, and Stephen Somogyi, a director at Guild Group and UniSuper and an advisor at Monash University. O’Neill and Somogyi failed to have their board tenures renewed, which expire on April 11, a spokesperson for FASEA confirmed.
Meanwhile, FASEA board members Carolyn Bond, who is a former co-CEO of the Consumer Action Law Centre and a member of ASIC’s Consumer Advisory Panel, and Deborah Kent, founder of advice practice, Integra Financial Services, have both been reappointed to their board positions.
While FASEA has been responsible to date for setting up the legislative instruments to enshrine the new education pathways for financial advisers, the statutory body was mentioned recently by Joanna Bird, ASIC’s wealth management executive director, as one of the existing entities that could take on the industry’s disciplinary body role.
In addition to FASEA, Bird also mentioned the Australian Financial Complaints Authority (AFCA) as an organisation that could perform the task of the industry’s disciplinary monitoring function on a panel at Professional Planner’s Retirement Conference in Sydney in March. Bird was joined on the panel discussion by Treasury’s Michelle Dowell, the FPA’s Dante De Gori and SMSFA chair, Deborah Ralston.
FASEA 2.10
One of the recommendations to come out of Hayne’s royal commission final report was for the creation of a new disciplinary system for financial advisers.
Recommendation 2.10 from the Hayne report states that the law should be amended to establish a new disciplinary system for financial advisers that requires all financial advisers who provide personal financial advice to retail clients to be registered. The recommendation calls for a single, central, disciplinary body; requires AFSL holders to report ‘serious compliance concerns’ to the disciplinary body; and allows clients and other stakeholders to report information about the conduct of financial advisers to the disciplinary body.
In response to Hayne’s recommendations, the Financial Planning Association joined with the Association of Financial Advisers, Boutique Financial Planners, the Financial Services Institute of Australasia, the Self-managed Superannuation Fund Association and the Stockbrokers and Financial Advisers Association to form a special purpose company named Code Monitoring Australia (CMA) to operate the compliance scheme under the new system.
It remains to be seen whether the government in power – following the yet to be announced May Federal Election – opts to appoint an existing statutory body to be the industry’s disciplinary body, or whether it looks to create a new statutory body to monitor the industry and dish out penalties. What’s also not clear how a new or existing government will interpret Hayne’s recommendations relating to a single disciplinary system.
“The royal commission recommended there be a single disciplinary code monitoring system for financial advisers… ASIC will work with Treasury in deciding how to implement the recommendation. Our desire would be to see a system that’s not overly complicated and doesn’t have any unnecessary duplication of regulatory function,” Bird said during the panel discussion in March.
A new code monitoring body will be approved by ASIC in consultation with Treasury by October this year in advance of the requirement for all financial advisers to be registered with an approved compliance system by November 15 so they are ready to be monitored against starting in January 2020.
