AFA News 02 March 2021. The reputation of the Financial Advice profession has been under attack for many years. This was raised to an extreme level during the Banking Royal Commission hearings on financial advice in April 2018, where predominantly institutional executives were put in the hot seat and grilled in a way that played to the media and generated significant media coverage.
This negativity has been repeated many times since, including when the final report was released in February 2019. It is often repeated by politicians. What people seem not to appreciate is that the Royal Commission was given information on all misconduct over a 10 year period and had immense powers to obtain information. It was not a surprise to anyone that there would be some disturbing stories to tell. That would be the case for any industry that was the subject of a Royal Commission.
As a result of the Banking Royal Commission, the financial advice profession has a challenge to repair our reputation in the eyes of the general public. This is of course very different from the reputation in the eyes of existing financial advice clients, where recent research by CoreData and IOOF illustrates that existing clients highly value the services they get and place a lot of trust in their financial adviser. Existing clients are the silent voice in the debate on the future of financial advice. We need to work hard to elevate their voice and to make them part of the debate about the future.
Challenging the Incorrect Use of the Term Financial Adviser
Part of this defence of the reputation of financial advice is to alert the media and other agencies when they incorrectly refer to someone as a financial adviser, when they are simply not a financial adviser, or have not been for a long time. This has certainly been the case with the unfortunate high-profile story of Melissa Caddick. The media have been referring to her as a financial adviser. A check of the Financial Register shows no evidence of her at all, and a check of the ASIC Authorised Representatives register simply shows that she was authorised for 10 months in 2004 and 5 months in 2009. That is a very long time ago.
As part of the 2017 Professional Standards Legislation, rules were introduced that prevents someone who is carrying on a financial services business from describing themselves as a financial adviser when they are not (Section 923C of the Corporations Act). These rules do not prevent the media from describing someone as a financial adviser when they are not. We need to alert the media in these instances – it helps no one to have these media articles refer to someone, who is accused of misconduct, and to describe them as a financial adviser, when that is simply not the case. We have equally been making this point with ASIC.
For any feedback on this issue, please email policy@afa.asn.au
Issued 02.03.2021. AFA Policy & Education Update
