At the Hayne royal commission hearings on Monday, counsel assisting Michael Hodge asked Mr Thorburn whether the move by retail banks such as NAB into other areas, particularly into wealth management, had been a failure.
“I think if you looked at the – I mean, if you looked at the raw – raw evidence, I would probably have to agree it had – had been. I don’t think it needed to be, but it probably has been,” Mr Thorburn said.
Questioning moved to the record-keeping of NAB’s four advice licensees, with Mr Hodge citing to Mr Thorburn the problems around applying a methodology for NAB Financial Planning and then applying that same methodology to its other licensees.
In particular, Mr Hodge noted NAB’s record-keeping issues around its more than $600 million in ongoing service fees through its licensees over a six-year period.
“The problem with the methodology is that the premise of the methodology you’ve agreed for NAB Financial Planning is that if you don’t have a record of service being provided, you’re going to refund the fees?” Mr Hodge said.
“Yes,” Mr Thorburn replied.
“The problem, if you tried to apply that over to your advice licensees, is that you just don’t have any records or very few records – inadequate records?” Mr Hodge asked.
“Well, I think we don’t know that yet. I think that’s the process we’re going through,” Mr Thorburn said.
When asked about a potential industry solution, Mr Thorburn said it was possible, citing the Financial Services Council as a key player in that solution.
“As I understand it, the FSC, Financial Services Council, which is often – sorry, not often – the amalgam of sort of advice type partnerships for the industry beyond the banks, this is a common issue. It’s a common question that has been put to them by [the] regulator, and clients and planners,” Mr Thorburn said.
“I think there is a view that if they could sort of agree that it’s done properly, thoroughly, professionally within the sector, that will cause the whole thing to be resolved in a much quicker way.”
“”I’m sorry, I’m still not sure I understand. What is the industry solution, though, to this problem?” Mr Hodge asked.
“Well, I don’t think they found it yet. I think that’s what they’re working through,” Mr Thorburn said.
A dodgy corrupt bank CEO wants to pass the buck onto a dodgy corrupt industry cartel of which they are a member
Shocked by the answer to Hayne, yesterday should clients not be invoiced for work with financial planning and Thornburn had no clue.
Financial planning is forward looking and no adviser will ever pick up the phone and call a client for any work unless there is a fee being paid!!
If there is a change in the investment climate, unless there is a fee that is ongoing, no one will call the client to make changes or assist.
Big Four have no clue
Being a member of the FPA you’re obviously complicit and comfortable with NAB’s position and having this member in your rank. Could you ask the FPA why your bretheren- NAB FP (a full fee paying member, whose fees sit right beside yours on their balance sheet) if they’re still happy with this member?
The same FSC CEO who couldn’t answer simple questions on the RC stand. This comedy just gets better and better.
The “industry solution” was “found” eons ago – it’s about transparent billing for all services rendered (a simple thing called “invoicing”) and it’s the only way to stop teh practice of clipping tye ticket of every dollar that passes you by. It’s anathema to the shonky and lazy but it’s what all professionals od. That doesn’t ensure poor behaviour but it does eliminate people being charged for things they don’t want, get or need and it does remove the risk of non-disclosure. That in turn allows for better informed clients and less sales-driven “advice”. Which rocks have these bank spiders been hiding under for a few decades?
So you’re saying I can get a refund on my Foxtel, Gym membership, magazine subscriptions, & my Barefoot Blueprint subscription?
If you never signed an agreement, yes! The whole point is that clients MUST agree to pay for what they get. You do…or you get a refund AND you can return the goods, too. If no goods were delivered (or no service) then you’d be jumping up and down like a scalded cat.
This narrative is a ridiculous construct of those who don’t want to have to work for their money.
I’d personally prefer to align my business model with every other professional; I don’t want to be considered the equivalent of those who sell the products your referencing.
Big Four, pass the buck to FSC.
Because of your incompetence with servicing clients, all of us will have to pay the price of being tarred with the same brush.
How can you have an advisers with 1500 clients on their books and expect them to service them.
Its all about sales, FUM etc…
How do the industry funds do it?
We have the answer, its called opt in and FDS, you HAVE to service clients now! This fee for no service was before FOFA, don’t they realise this? These ceos shouldnt open their mouths every time they do they show a real lack of knowledge of the subject matter, and its only ever to change feet. Planners have NEVER asked the FSC for anything! We mostly hate the FSC! Get into the real world talk to some real people at the coal face not these latte sipping fat cats that don’t venture out from North Sydney. They don’t live in the same world as us planners at the coalface. They only serve to prove their own stupidity by speaking at these commissions, and I for one want it known that they don’t speak for us that actually service the clients on a day to day basis.
Here here. We can explain the value we have offered clients for over 20 years ! We are self employed and corporate authorised representatives of a bank. During those 20 years we have never been asked by a NAB executive to explain our value proposition and never received a referral from the bank. We do not advertise as all our new business comes from client referrals. I have never understood why a bank would invest in wealth management and not ask the successful practises what makes them successful. A sure path to failure and now they are throwing the whole industry under the bus.
Oh Great now the Dodgy FSC are supposedly going to fix all the banks Advice records and compliance.
Please just get out of Advice, let it be done by none product providers and stop the absolute BS responses to the years of stuffing up the Financial Advice landscape the Big Banks and Insurance companies have done wanting to own everything in the chain.
[b]Ban Vertical Integration is the only real and sensible solution. [/b]
That would be a ban on all industry Funds providing advice.
Probably not going to happen.
ASIC wants these big vertically integrated companies because at least ASIC can bully them into submission & there is a profit line behind the company that means clients can get financially remediated.
What happens when an independent gives shonky advice & clients lose out? There’s no backing behind them. That would be a nightmare result for ASIC because if the larger licensee disintegrate how will ASIC manage the plethora of newly self licensed individuals?
WTF! Talk about letting the fox into the hen house. Is he seriously suggesting FSC should “fix this”?
Is he serious?. NAB licencees are renown for being OVER COMPLIANT, at least in their dealings with advisers. Is he to be believed the many NAB owned AFSLs never insisted advisers kept file notes of reviews & fees. That’s rubbish ! BTW Mr Thorburn, the FSC is a lobby group of PRODUCT MANUFACTURERS. Ask you highly lawyers to re-read the Corps Act. Off the hook, Mr Hodge