Coalition to form 'standards body' after financial advice scandals
|
Version 0 of 1. The Turnbull government has responded to the scandals plaguing the financial advice industry by announcing plans to establish a new independent “standards body” to govern the professional standing of the industry. The minister for revenue and financial services, Kelly O’Dwyer, announced the policy on Monday. She said the new standards body would enforce exams, establish a code of conduct for the industry and require all financial advisers to have a certain level of education. It will also require financial advisers to undergo constant professional development. The government’s plan would come into effect on 1 January 2019 and affect Australia’s 22,500 financial advisers. “This independent standards body will raise minimum standards in the financial advice industry and improve public confidence in the sector,” O’Dwyer said on Monday. “We know that it has taken the accountants hundreds of years to have high professional standards. We know that the same has occurred with lawyers. But we need to turbocharge high professional standards for financial advisers.” O’Dwyer said a code of ethics for the industry would ensure financial advisers were held to a “high standard of ethics,” with non-compliant advisers subject to disciplinary action and sanction. She said professional associations would monitor and enforce the code of conduct, backed up by the Australian Securities and Investments Commission. O’Dwyer said the cost of setting up the body would be borne by the big four banks and AMP. Its ongoing operation will be funded by the industry and its chairman and directors would be appointed by the minister, she said. Existing financial advisers will have until 1 January 2021 to pass the new exam and until 1 January 2024 to reach degree-equivalent status. The Greens cautiously welcomed the announcement on Monday, saying examinations and a mandatory code of conduct were good ideas. But the Greens’ treasury spokesman, Peter Whish-Wilson, an economist who spent years working on Wall Street, said the code of conduct must have teeth and disciplinary action and sanctions must be tough. “The Greens have always advocated for a mandatory code of conduct for this industry, including a US-style system for advisor examinations, namely the Series 7 and 63 exams,” he told Guardian Australia. “Evidence suggests voluntary codes just don’t cut the mustard. “Joining other industry [such as legal and accounting] bodies by having a mandatory and enforceable code of conduct is an essential step in the right direction for the industry to be taken seriously and for consumers to have confidence in their financial advisors.” Earlier this month, the Turnbull government’s parliamentary hearing into the major banks heard none of the banks wanted a royal commission into the industry, despite numerous financial planning scandals. The National Australia Bank’s chief executive, Andrew Thorburn, said even though NAB had delivered poor financial advice since 2009, leading to $15m in compensation being paid to 750 customers, and the sacking of 43 of its 1,700 planners, it was not a “systemic issue”. ANZ’s CEO, Shayne Elliott, admitted that some of ANZ’s customers had not been advised that their financial advisers had been banned by Asic. |