Strong support for mandatory testing for financial advisers

Given that financial advisers are the custodians of the future financial wellbeing of many Australians, Governance Institute of Australia (formerly Chartered Secretaries Australia) is urging the government, as a minimum, to heed the Australian Securities & Investments Commission’s (ASIC) plea for mandatory testing for all new and existing advisers on Tier 1 products, mandatory monitoring and supervision of new advisers, and a mandatory online update review for all advisers every three years.

In fact, an investigation by ASIC in 2011 which tested the quality of financial advice found that only three per cent of plans were of good quality. The ‘shadow shopping’ exercise rated only two of the 64 plans tested as ‘good’. Worse, 23 of the plans (more than a third) were judged by a panel of industry experts to be ‘poor’.

“There are continuing ongoing examples of where rogue financial planning advisers have cost mum and dad superannuates dearly. Many will never recover from the likes of Westpoint, MIS and most recently CBA financial planners,” the chief executive of Governance Institute Mr Tim Sheehy commented.

“The reality is that the financial advising sector hasn’t stepped up to the plate in terms of ensuring its operatives have the knowledge and skill to provide quality financial advice. If the sector wants to be seen as a profession then they have to accept what comes with that.

 “Virtually every recognised and respected professional services body demands extremely high levels of professionalism of their members.  They have rigorous educational requirements for entry and mandatory continuing professional development to ensure appropriate levels of skills and expertise.

“Unfortunately, this is not the case in the financial advising sector and ASIC’s proposal for mandatory testing should be adopted. We would also encourage the sector to introduce a mandatory code of conduct which would result in the expulsion of members from their association if they are found wanting.

"The future financial wellbeing of Australian should not be comprised by poor advice and advisers must accept that ongoing quality education and training is critical if they are to be effective stewards of their sector,” Mr Sheehy concluded.

For further information contact Viv Hardy at CallidusPR on (02)9283 4113/ 0411 208 951 or Tim Sheehy on 02 9223 5744 or 0419 490 594.

About Governance Institute of Australia

Governance Institute of Australia is the only independent professional association with a sole focus on the practice of governance. We provide the best education and support for practising chartered secretaries, governance advisers and risk managers to drive responsible performance in their organisations.

MR/2013/19

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