Phil Anderson (left), Alex Euvrard (second left) and Paul Derham (right)

There is a direct relationship between the size of a licensee and their likelihood to admit to having conflicts of interest, three quarters of smaller AFSLs believing they have none.

The finding is from survey research from financial services law firm Holley Nethercote, which launched the inaugural ‘Compliance Trends Survey Report’ at a briefing in Sydney on Thursday morning.

The findings come amid debate sparked at the Professional Planner Licensee Summit last month, where CoreData Research founder Andrew Inwood claimed self-licensed advisers would be “the next failure” for lack of effective governance, leading to a rebuke from former licensee boss Paul Harding-Davis.

The Holley Nethercote research found the smaller the licensee, the less likely it is to perceive it has no conflicts of interest, with 77 per cent of licensees with under five representatives citing none.

But for larger licensees (over 100 representatives), only 27 per cent said they had no conflicts.

Source: Holley Nethercote via HN Hub.

Some 96 per cent said they maintain a conflicts of interest register, but half of financial advisers surveyed said they had no conflicts of interest.

After the briefing Holley Nethercote managing partner Paul Derham told Professional Planner he was surprised that over half of respondents did not believe they had conflicts, but wasn’t surprised the larger licensees reported a higher amount.

“It’s not unusual to see the bigger they are, the more they spend on education and understand their obligations,” Derham said.

He added that Standard 3 of the Code of Ethics, which deals with conflicts of interests, has perpetuated the misunderstanding.

“Standard 3 requires the advice provider not advise, refer or act in any manner where they have a conflict of interest,” Derham said.

“That’s a misunderstanding of a conflict of interest. Everyone has conflicts, the question is how do you manage them? When the Code of Ethics says avoid conflicts, what it’s really saying is manage them.”

My Dealer Services director Alex Euvrard offered a similar perspective at the briefing.