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professional standards
Hayne Royal Commission

Knee jerk reaction to Hayne revelations

John Hewison
Founder and Director
7 Aug 2018

I find it frustrating that governments who have resisted advice for change for so long make knee-jerk reactions when they are found out, as has been the case with the Hayne Royal Commission.

In the first instance, we had the knee jerk reaction of an annual exam for all financial planners to prove competence. It has been proposed that this test consist of a 2-3 hour annual exam, set at degree level, to test practical application of advice and ethics. But this follows recent legislation that increased the education standard of financial planners to a minimum degree based standard and an overall education regime.

The new exam proposal is a totally useless piece of government window-dressing, which will be extremely costly and logistically difficult to implement.

Now we hear that the government is introducing the $70.1 million funding to install “ASIC corporate cops” within the four major banks and AMP to monitor governance and compliance actions. Are they serious?

How is it the taxpayer’s responsibility for funding the compliance and governance supervision of these major financial institutions who have been found to be grossly negligent in the past? These “big five” institutions account for more than 70% of the total financial adviser population in Australia. ASIC has traditionally focused on this sector of the industry to represent that it is adequately supervising the industry. Well that certainly hasn’t turned out too well has it? This latest revelation is unlikely to achieve anything other than more window dressing at the taxpayer’s expense.

Professional practice, compliance with the law, fulfilling the fiduciary duty to the client by acting in their best interests without conflict of interest are all cultural issues. Meaningless sanction introduced into an alien, poisoned culture will achieve nothing.

The government needs to heed the wake-up call and start listening to those industry participants and professional associations who have been dedicated to the cause of client care and professional standards for decades rather than the balance sheet driven opinions of the “big end of town” who are so hopelessly conflicted both in terms of their business model and their pure profit focussed outcomes.

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.