Posts in Editor's Picks
Westpac and the Laws of (advice) Robotics

Smarter Compliance. The financial advice market is, depending on your perspective, either evolving or being disrupted. Technology - digital advice - presents a compelling alternative to the expense and risk of traditional distribution models. But, before we despair about the unfairness of replacing advisers with computers and algorithms (or celebrate the emergence of an objective and unbiased advice service) it’s important to appreciate that the models have similar issues and that while the nature of regulation may change, it’s as essential as it is now.

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Management and Consequence Management

Smarter Compliance. The Regulators’ focus on large institutions, and APRA’s self-assessment initiative, identified consistent deficiencies in the way Licensees respond to incidents, breaches and non-compliance. Consequence Management is not a complete solution (monitoring, supervision and remediation are equally important) but focusing on consequence management is an effective and efficient way to create and maintain a good corporate 'culture'. Properly applied, it may also spare you adverse publicity. 

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Where FASEA gets it right: Training and Competency

Smarter Compliance. Effective education and ongoing training is the bedrock of every profession. So how can an advice profession emerge from an industry that prefers validation and convenience over development, engagement and deliberate practice? In our view, it can’t. In this article, we explore Continuing Professional Development from a different perspective - the sustainability of advice businesses - and argue that FASEA are right to push for tailored, engaging and challenging CPD.

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Review and remediation: "make it right"

Monitoring and Supervision, Consequence Management and Remediation are three elements of a compliance framework that best highlight, or expose, a Licensee’s capability and competence. Not only do they reveal fundamental aspects of a Licensee’s organisational competence but, more importantly, they expose its values, principles and standards.

This article examines explores ASIC’s views and provides tips for better results.

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Once more unto the breach (register), dear friends, once more

The Royal Commission has highlighted some curious processes followed by some of the larger licensees. Their laidback approach to breach reporting, in particular, has attracted the type of attention they might otherwise preferred to avoid. Breach reporting isn’t that difficult to grasp, but perhaps everyone needs a little help from time to time.

This post covers the key things you need to know and the What, Why, How and When of breach reporting.

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Assessing Licensee risk: "Clowns to the left of me, Jokers to the right"

Choosing a licensee is a big decision and one that needs to be made after assessing the risks the prospective licensee poses to you. The reality is that neither qualifications nor adviser mobility are the best indicators of 'Licensee risk'. They are not even reliable predictors. Unfortunately, the underlying causes of licensee risk can't be accurately divined from publicly available data, or at least not without considerable time, energy and insight. This looks at some common risk indicators before focusing on the real issue.

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"Giving hostages to fortune": Licensees, Advisers and the ties that bind them

Francis Bacon wrote “He that hath [a Licensee] has given hostages to fortune; for they are impediments to great enterprises, either of virtue or mischief” or at least he would have had he been entertained by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. This article explores the acts and omissions of Licensees and the challenges facing licensees and advisers as a result of the Commission’s scrutiny of the financial services industry.

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An Adviser's guide to cryptocurrency

Cryptocurrencies may have been “the future of money since 2009”, but digital currencies – like Bitcoin, Ripple and Ethereum – are only now being enthusiastically embraced by the general public. This guide for Financial planners addresses the inherent risks and benefits of cryptocurrencies and Regulators' response to their increasing fervour for virtual currencies. The guide considers whether, and to what extent, digital currencies can be considered alternative assets. It explores the practical challenges advisers face in dealing with cryptocurrencies and provides a number of tips to avoid trouble. 

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Don't look back in anger: Insights from a former adviser

In reality, financial planners and compliance reviewers have more in common than they realise; both understand the value of advice and both are committed to building an advice profession. I know this to be true because I've done both roles. Here are the lessons I learnt when transitioning from financial advice to regulatory advice and compliance. Don't look back in anger.

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Is your Licensee your greatest risk?

Advisers join Licensees for a variety of reasons - price, convenience, shared values and history - but underlying all these is the presumption that the advantages of joining a Licensee outweigh the disadvantages. What if that presumption is wrong? What if your Licensee's conduct is a far greater source of compliance risk to you then your own conduct? This article explores the risks implicit in the Licensee and proposes some practical ways to mitigate those risks.

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Trust, Culture and Enforcement

On 12 September 2017, ASIC Chairman Greg Medcraft presented at the Thomson Reuters Newsmaker event and articulated his view that ASIC is primarily an enforcement body responsible for promoting investor trust and confidence in financial services. With reference to the ongoing actions involving Commonwealth Bank, NAB and a range of smaller licensees, the Chairman discussed ASIC's priorities and addressed a variety of topics including trust, reputation and culture. This article explores the reasons, consequences and implications of those views. 

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Appropriate, and better, risk advice.

Struggling to understand how to recognise 'appropriate' risk advice? Worried whether reasonable advice  meets the best interest duty? This article tackles these ideas and argues that appropriateness doesn't require an adviser to provide perfect or ideal advice. Nor does it require the adviser to provide the highest level of care. 'Appropriate advice' is fit for purpose and based on the risk professional's consideration of their client's relevant personal circumstances. 

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The perils of safe harbours

The safe harbour provisions were intended to provide advisers with clarity about how to satisfy their best-interest duty, instead they have compromised it. In practice, checked steps and repeated commitments “to act in the client's best interests” are substituted for any real attempt to act in the clients’ best interests. Licensees, and advisers, obsessively focus on the “safe harbour” provisions, and how to demonstrate how their advice is in the client’s best interests, rather than obsessively focussing on providing advice that is, in fact, in their clients’ best interests. Safety, and better advice, requires advisers to set a new course. 

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Compliance Insights: Lessons from REP515

ASIC Report 515 "Financial advice: Review of how large institutions oversee their advisers" addressed how "effectively Australia’s largest banking and financial services institutions oversee their financial advisers". In a previous article "Who watches the watchers" we focused on cultural and structural reasons for the problems ASIC identified. This post focuses squarely on the practical lessons one can extract from REP515.

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Five reasons Compliance is "meh"

If you work in financial services, you understand that bored indifference, feigned interest, and eye-rolling are common reactions to most "Compliance" conversations. The brutal reality is that for most people, Compliance is simply “meh” - uninspiring, undesired and unexceptional. That's a bitter pill to swallow, but changing perceptions starts with first acknowledging the reasons why compliance elicits this reaction.

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What is “independent advice”?

The increased public focus on vertical integration and the dangers of institutional advice has, understandably, driven an increasing focus on independent advice. The challenge, for both consumers and advisers, is that “independence” is neither consistently nor effectively defined. This article considers whether "Independence" and "institutional alignment" can co-exist and asks whether the profession needs to define independence on the basis of outcomes rather than structures.  

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