With focus on netwealth’s “AdviceTech Research Report” and the Banking Royal Commission, we try to explain the growing interest in reg-tech amongst forward-looking licensees. After watching larger financial institutions demonstrate the value of compliance by highlighting the cost of its absence, smaller licensees may be seeing this as an investment in their sustainability and a hedge against ASIC’s views of ‘poor risk cultures’.
As the Banking Royal Commission has highlighted, advisers have generally enjoyed unfettered mobility between licensees; neither their compliance, conduct nor capability have provided any real obstacle to determined licensees focused on growth. The obvious limitations of this approach are commemorated on the ASIC website and in Rep515, the Regulator’s recognition of “inadequate background and reference-checking processes” and releases on strategic changes and cancellation of licenses. This article proposes five steps to minimise the risks and costs of adviser recruitment.
One of the biggest decisions made as an adviser will be choice of Licensee. The recent closure of Dover may not have come as a surprise, but the speed in which it occurred still came as a shock to many observers. As we have previously argued, choosing the right Licensee is perhaps the most critical decision an adviser needs to make. This article explores the questions advisers should ask of their prospective licensee and identifies the signs by which an adviser can identify the right time to leave their current licensee.
The Australian Financial Complaints Authority (AFCA) is a new super-EDR scheme that will hear complaints against financial institutions including Australian Financial Services Licensees, credit providers and credit representatives, superannuation funds (other than self-managed superannuation funds), approved deposit funds, life insurers and general insurers. Although AFCA doesn’t open for business until later in 2018, Licensees (and others) need to consider membership and the consequential changes they’ll need to make to their disclosure documents and websites. This article explains ASIC’s relief and the extended transition timetable.
It’s hard not to read recent media coverage of our industry without anticipating a fundamental shift in advice. New education changes, a renewed focus on conflicts and a regulatory challenge to the ongoing service model that underpins the entire industry. While media focus on the institutional players, this article discusses the impact on, and opportunities for, professional advisers in the post-Royal Commission environment.
The Royal Commission into Misconduct in Banking, Superannuation and Financial Services exposed conduct - “fee for no service" - that shows contempt for both consumers and the law. Licensees' confected contrition aside, their ‘gold medal’ revenue generation strategies have further eroded their social capital and generated a wave of consumer outrage that is entirely justified. Unfortunately, those advisers that have worked hard to build sustainable businesses supporting their clients and servicing their needs, may find themselves collateral damage in this War of Accountability. This article looks at the FFNS issue, ASIC's response and proposes some immediate actions for advisers and licensees.
The Regulator’s focus on culture underplays the agency of management, staff and advisers and provides a convenient excuse for poor choices. Rather than focusing on culture, perhaps its better to focus on consequences. 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.
Conflicts of Interest seem endemic in financial services. The Banking Royal Commission has identified potential conflicts in the mortgage broking and lending sector. Approaches to conflicts are not consistent across the financial services industry. This post examines the key elements and, with a focus on mortgage broking, proposes some solutions for the identified problems.
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.
The mortgage broking industry has, for a variety of reasons, recently attracted an increased degree of regulatory attention. In the midst of a Royal Commission this is hardly likely to comfort alert mortgage brokers . As the Banks, that both dominate and compete with the mortgage broking industry, identify problems and propose solutions, brokers are left to puzzle out the likely consequences of these discussions. This article explores the reasons and the drivers for the anticipated reforms of the mortgage broking industry.