There is no doubt that Australians are keen to receive financial advice.
The most recent Australian Financial Attitudes and Behaviour Tracker, released by the Financial Literacy Foundation, found that bank websites are the most common source of information Australians consulted in the last six months across all product types when looking for financial information. This was particularly true for under 35 year olds.
Nevertheless, only 1 in 5 said that they discuss their household finances with a finance professional.
In an initiative to increase the professionalism and presumably the reputation of financial planning, the Australian Bankers’ Association has announced a new, improved way of hiring financial advisers.
The new protocol sets minimum standards for checking references and sharing information, through a series of standardised questions and record keeping practices.
“Sometimes a financial adviser can be removed from one financial institution for poor conduct, only to turn up working and continuing their poor practices at another,” Australian Bankers’ Association Executive Director – Retail Policy Diane Tate said.
“To help avoid this, the banking industry has developed a protocol to make it easier to check how financial advisers have performed in previous jobs.
“This will better identify financial advisers who have not met the industry’s minimum legal and ethical standards, and help employers make more informed recruitment decisions,” she said.
ASIC recently released its guidance on review and remediation conducted by Australian financial services (AFS) licensees providing personal advice to retail clients.
“ASIC wants to ensure that advice licensees proactively address any systemic problems caused by their conduct and, where necessary, put processes in place to remediate their clients for loss suffered in a way that is timely, fair and transparent,” ASIC Deputy Chairman Peter Kell said.
The key principles set out in the guidance are:
- review and remediation is likely to be appropriate where a systemic issue has occurred that may have caused loss or detriment to clients
- the scope of review and remediation should ensure it covers the right advisers, the right clients and the right timeframe
- the process of review and remediation should be comprehensive, timely, fair, and transparent. There should be clearly defined principles to guide the process and an appropriate governance structure
- effective, timely and targeted communication is key to ensuring that clients understand the review and remediation and how it will affect them; and
- clients should have access to an EDR scheme if they are not satisfied with the remediation decision made.
“Advice firms that take effective and timely steps to fix problems if something goes wrong will be much better placed to retain the trust and confidence of their clients,” said Peter Kell.