Hauled before a tri-partisan senate inquiry in Canberra on Tuesday, representatives of CBA, Macquarie, ANZ and NAB turned attention to the activities of former employee advisers still operating in the industry.
While Greens Senator Peter Whish Wilson said in a press conference before the hearing that “vertical integration is the elephant in the room”, exchanges at the hearing focused more on the advisers under the banks’ management, rather than the managers themselves.
Commenting on the story, a number of ifa readers suggested the bank executives were attempting to shift blame to advisers once again.
“What about the dodgy execs that created the unsustainable sales models in the first place and went behind ASIC’s back to manipulate files etc. Where are they now?” one ifa reader asked.
AIOFP executive director Peter Johnston said the comments from the bank executives showed that the senators leading the charge against inappropriate advice were focusing too heavily on intermediaries and independents, not bank executives.
“We are frustrated with the two sets of rules the media, lawyers and the regulators apply when investigating poor advice or more importantly product failure in our industry,” Mr Johnston told ifa yesterday from Shanghai, where the AIOFP will next week take part in the Australian Food, Wine and Investment Expo.
“If an independent practice is involved with product failure or poor advice, the advisers and management are pursued; if the adverse publicity does not finish them, bans and the AAT will.
“[Whereas] if the institutions are involved with bad advice the specific managers responsible for the events are quietly shuffled sideways or out the door and the advisers are blamed, not the culture they operate in. The result [is that] nothing material changes.”
Mr Johnston said that if the senators are serious about “consumer protection” then regulators and institutional executives should not be able to get away with blaming advisers.
However, a number of the executives did publicly apologise for poor advice provided, including CBA’s Ian Narev and ANZ’s Joyce Phillips.
As potentially one of the 41 Ronin, I can tell you that the bank PDMs & Exec can make up any crimes as their excuses of defence with files in their hands & accusations against people no longer there. How could they explain so many complaints undetected for so long when they are supposed to manage their staff? When the noises die down, it will be business as usual for the banks.
For the greater good of the industry & restoring consumer confidence, legislation imposing severe personal penalty on management & exec, including those who have already moved on is essential. There must be minimum duty of care to consumers when exec have full management power, not to mention they enjoy lucrative bonus by just whipping their staff.
The independents are personally responsible for their businesses so why would bank exec & PDMs have immunity???
So we all know what the real picture is and where the real problems are. so where are the real politicans that want real solutions. Where’s the so insightful and all knowing Jacjkie Lambie now ????
Are the senators going to interview independent financial advisors so they get a broad view of the issues facing the industry and not just from the banks.Many small independent advisors are overloaded with regulation and compliance but continue to provide excellent services despite what the “average” consumer might think
Seriously had enough of these bank & insurance company executives who are calling for more regulation and are rubbishing our profession due to the product flogging sales culture they created & promote.
To them it all about spreadsheets, sales targets & bonuses
Id love to see them sit in front of a client and develop a real strategy rather than a so called complaint Statement Of Advice that is designed to disguise product flogging as advice
If they are paid by the bank, they work for the bank
Also hows the hide of these same execs wanting to set up a compensation scheme that they want to be exempt from that we will all have to pay for!!!
Isnt that what we pay excessive PI insurance premiums for, that only go up due to the size of the claims being made by the banks
The big boys stuff up and the little guys are made to pay for it
Altogether a disgusting display of shifting blame onto advisers who have to fill unsustainable product sales targets so that the managers up the chain can afford their BMWs, Tuscany holidays and kids in private schools. Who do these turds rolled in glitter think they are conning? Not the public any longer.
I am now retired from the industry but still observe with interest. There is an old saying I once heard which has many applications. “the fish always stinks from the head”
I worked with NAB for 6 years and I can honestly state that this was a systemic issue, not an adviser one. The bank executives drove the policy, set the ridiculous KPI’s and “product pushes”. How dare they suggest it was driven by individual advisers.
They clearly didn’t understand what financial planning was all about when they decided to get into the area; pushing their banking models (product sales) onto an advice and service driven industry.
Once again, the poor planners have got
‘buckleys chance’ of receiving any ‘fair & balanced’ view or hearing when you have senior execs in charge of the FSI that were chief ‘engineers’ of the banks ridiculous sales models in the first place.
The same can be said for churning! These institutions know who the culprits are and encourage them as it’s all about getting targets and bonuses not about doing the right thing for the consumer. The worst thing is good advisers get caught up in it.
Oh, we know where many of these execs are….but it would be almost impossible to nail them.
Unless there’s a Royal Commssion with broad terms of reference, these guys & girls will just cruise along, unchallenged.
Safe in the knowledge that unless there’s a Wikileaks like cache of incriminating docs available….(but there’s isn’t)…life will just be tickety boo.
And Mr Narev et al can apologise. But what does that deliver….6 parts of 5 fifths of stuff all really.
So called “Rogue Advisers” are the convenient whipping boys for all of the following:
Poor Advice, Product failure, Market Volatility, Underinsurance, Commission Based remuneration models, ridiculously low qalifications required to be an adviser, accountants who ploughed money into agri schemes, regulatory failure, the GFC, Climate change, the crime rate, domestic violence etc etc.
It’s amazing we have any clients at all. Yet they continue to seek advice
But will they pursue what can only be called the corruption of advice by these corporations?
Much easier to continue to attack advisers, we cant afford to fight back.
These are the same groups trying to force level commissions because the “advisers churn”, another blatant unsubstantiated lie!
Hooraaayyyyy and about time. But lets be realistic how many US banker exec’s did time or have a ruling against them after their banking system collapsed through corrupt management and sales incentives.
The Banks never created or developed the advice profession. They were going to get creamed by super funds and unit trusts vs their old savings accounts so they went out and bought whole advice firms and teams, most of which derived from the hard nut insurance sales culture. The banks grafted that onto their trusted big names but the culture remained. The old insurance sales culture was exactly right for selling risk insurance ( has to be sold) and the old capital guaranteed whole of life plans, but was never right for advising on large market linked life savings etc, which is why we have been transitioning culture for over 20 years. But in taking the money the Banks should also take the responsibility of a Licensee. That is, the licensee is 100% responsible in every way, every word and comma and nuance for what goes out the door. Send them to jail.
I’ve been saying it for years, the simplest way to fix this sort of institutional problem is make the executives personally responsible and liable to prosecution. The same was done with OH&S and deaths in the work place, all of a sudden OH&S is taken seriously. If there is a systemic and dodgy advice process in an institution, then the executives should be personally liable and prosecuted! There’s an old saying “a fish goes rotten from the head first”, this is certainly the case in these advice scandals, the executives have allowed rotten processes to be put in place! Ultimately it’s just the typical executive mentality of cost of doing business, we’ll make millions from poor practices and if we get caught, then we’ll just pay out a pittance and say sorry a few times, and point to those greedy advisers as the problem!
We also read that the “insto’s” have received thousands of requests for a review of advice but virtually no compensation has been paid. If this is true the question should be: Why are these organisations still licensed to trade?
100% correct.
The Sales Managers and execs got fat bonuses by cracking the whip and “turning a blind eye” to methods that bank advisers used to hit the aggressive sales targets.
They new what was going on.
Tony Soprano couldn’t have put it better….”shit flows downhill and money flow up”.
As long as there are sales targets, bonuses attached to those sales targets for the executives who create and manage the whole process, these types of events will continue to occur. Who better to blame than the advisor actually doing the selling???