CBA scandal splits associations

In an open letter to FPA chair Matthew Rowe – seen by ifa – AIOFP executive director Peter Johnston said his organisation is “dismayed and frustrated” with the FPA’s positioning, calling its offer to oversee the compensation process for CBA advice victims as “almost egotistical”.

“In the current case of Commonwealth Financial Planning [CFP], it is clearly a product manufacturer/management issue that allowed their advisers to indulge in advice and activities that were clearly not in the best interests of clients,” the letter states.

“Surely this is a Financial Services Council [FSC] matter? Shouldn’t they be commenting on the conduct of one their corporate members? Why are the FPA continually seizing on opportunities to denigrate the advice industry?”

Describing the FPA as being in a “servitude relationship with the regulators”, the letter also hits out at the FPA’s role in “past FOFA negotiations with former minister [Bill] Shorten” which “heavily discriminated against the independent sector”.

More broadly, Mr Johnston said the CBA advice scandal is a “prime example of [an] institution lacking integrity, not the advisers" and said all stakeholders need to stop “continually blaming advisers”.

To counteract the FPA’s 10-point plan to raise professional standards, the AIOFP has outlined seven recommendations for industry reform, including additional accountability measures for research houses and financial product manufacturers.

Meanwhile, the FPA has welcomed CBA’s announcement of a widespread review and changes to its compensation process, with a caveat that it will be watching progress closely.

“While the specifics are yet to be confirmed, CBA’s adoption of our recommendation of an independent review panel as an escalation point is a positive step in the right direction,” said FPA chief executive Mark Rantall.

“The FPA will make it a priority to review the action to be taken by CBA to increase education standards. We have proposed that CBA introduces a mandate that each and every one of their financial planners must undertake ethics training, commit to no less than 30 hours of professional development per year and sign up to membership of an approved professional association."

The full text of the letter and reform recommendations can be accessed here: http://www.ifa.com.au/blogs/13402-an-open-letter-to-the-fpa