FAAA wants misconduct reporting hotline to ASIC
Financial advisers should be able to access a priority reporting line to the Australian Securities and Investments Commission (ASIC) to report misconduct issues including unlicensed advice, according to the Financial Advice Association of Australia (FAAA).
The FAAA already has a memorandum of understanding with the Tax Practitioners Board (TPB) and chief executive, Sarah Abood, has told the Senate Economics References Committee she believes a similar arrangement could be established with ASIC.
Giving evidence to the committee relating to ASIC’s regulatory performance, Abood revealed the frequency with which the FAAA and its members reported instances of misconduct to ASIC but lamented the relative lack of feedback it received from the regulator.
She said that there were currently 11 cases which the FAAA had reported to ASIC which advisers regarded as “sufficiently grave” but did not know what, if anything, the reglator was doing about those reports.
Abood said that the only response the FAAA had received from ASIC had been a request for more information.
Asked by NSW Liberal Senator, Andrew Bragg whether the FAAA and its members could do more to assist ASIC, Abood said: “We absolutely think we could work more and help ASIC – a priority reporting line for professionals and professional bodies or an information sharing mechanism would help us work better together.
Abood told the committee that there was an opportunity for ASIC to better leverage intelligence from the financial adviser population.
“Advisers are considered trusted professionals and they are well placed to stop problems early,” she said.
“However, ASIC us to pass on information only to find no further information is sought from ASIC and it is disheartening for those involved.”
Abood said that the most common areas referred to ASIC had been with respect to unlicensed advice sometimes involving people who had previously been banned as advisers as well as social media influencers.
Asked how many people were guilty of such conduct, Abood said she could not be specific but that the number would be very large.
“When we are alerted by our members we want to shut it down as quickly as possible.”
Ah yes, everything old is new again. Two decades ago Alan Asher, who was then at the ACCC, was asked at an adviser function why we (advisers) could not complain to the ACCC when we became aware of adviser perpetrated breaches, particularly breaches involving “third line forcing” by advisers in the banks. His answer was the ACCC would only accept complaints that came direct from CLIENTS as ACCC felt they may be pulled into what they saw as inter-adviser competition.
It was made very clear that ACCC did not wish to become involved in what they saw as “competition issues” between advisers, over clients. And, to be fair, I could see their point
The fear of being dragged into ” puerile” competitive contests between advisers is probably also a consideration for ASIC, BUT the real issue with ASIC is they are not transparent. As noted recently they receive thousands of complaints a year, but only investigate the ones that suit their particular prejudices. I understand they don’t even acknowledge receipt of the complaint. Right now we have a situation where Standard 12 requires us to report breaches by advisers of the FASEA Code, BUT TO WHOM. Apparently it’s to your AFSL.
But for me it’s always been the question of whether or not advisers are regarded as genuine “stakeholders” in the financial services industry. It’s pretty obvious to most observers that ASICs first move when considering a problem or a change DOES NOT involve calling the FAAA. or anyone else known to be representing advisers.. It’s a regulator attitude problem: APRA for example never consulted advisers on the changes proposed in 2019 to the income protection contracts. And the insurers keep telling me APRA barely “consulted” with them as product manufacturers, and apparently as product distributors, ignoring the fact that the tied agency system disappeared two decades ago
Be careful what you wish for FAAA. Without true governance on ASIC as what ASIC can do with complaints, this one could come back and bite you big time
New name, same old dumb ideas.
Thanks to old risky’s comments I don’t need to point out how useless, biased and incompetent ASIC is.
Why isn’t the FAAA pushing for a professional standards board staffed by industry participants with strong disciplinary powers rather than suggesting we keep working with the current model that has clearly failed.
I should not be surprised when they did so little research the Flight Attendants Assoc had to take action on the original name before they became the FAAA. Laughable paucity of planning and vision.
How about some futuristic vision of what the profession can be rather than cuddling up to the keystone cops of ASIC?
Oh I forgot, it’s the old FPA. Lower your expectations.
Ring, ring.. Hello ASIC? Yeah, there is this guy with no shoes, he’s unlicensed and he making recommendations that everyone should join one industry super when it may not be appropriate, and I am hearing about people losing their insurances too, these are people who are obviously uninsurable, I also know he has stolen his budgeting advice from Dave Ramsay too… hello, ASIC? hello? hello?………
PMSL
As a Financial Adviser who has attempted to work with ASIC in order to prevent an investment scam that should have and could have been closed down many many months sooner, and also attempted to report a situation in the early days where individuals were getting Advice from an Accountant to set up a SMSF and invest in the accountants own investment products which subsequently collapsed, I can confidently say ASIC are more interested in extinguishing the cockroaches in the kitchen being Financial Advisers for spelling mistakes in a SoA or a Fee Disclosure statement issued before the anniversary date.
Add a sprinkle of corruption, a touch of incompetence, and a large dose of we just don’t care and you’ll make ASIC. When it comes to eliminating advisors it’s battle stations and buzzing sirens….when it comes to preventing the billions in scams and dodgy investments it’s take a number and we’ll get back to you.
Yep 100% agree, similar story trying to get ASIC to intervene in an Accountant run property investment scheme. ASIC did everything possible to avoid acknowledging even being told.
Of course scheme collapsed, millions lost and ASIC asleep yet again.
ASIC focus on Real Advisers for minor breaches of ASICs over cooked Reg interpretations.
Yep, agreed. Same thing when I reported and had proof of an adviser stealing funds from a SMSF. Turns out he stole funds from more than 1 SMSF.