Speaking at the 2013 Financial Planning Association (FPA) Congress in Sydney yesterday, Ms Maynard said the new rules represented an incremental change to previous obligations under corporations law to give appropriate advice.
“We had things going wrong under that regime, and I think things will continue to go wrong,” she said.
Ms Maynard acknowledged the FPA was on the “right path” with its push for professionalism in the industry, and she echoed the calls from her fellow panelists for all financial planners to report poor advice practitioners to the Australian Securities and Investments Commission (ASIC).
“I think we’re going along the right path, but I don’t think FOFA is the fix-all,” she said.
The removal of conflicted remuneration is one positive to come from the Future of Financial Advice (FOFA) reforms, said Ms Maynard.
“From the disputes that we see it does seem pretty clear that the conduct or the recommendations have been made to increase the income to the adviser,” she said.
In addition, it is “not uncommon” for disputes at FOS to involve a financial planner who has frequently moved between licensees, said Ms Maynard.
“We look at each stage of the advice, what advice was given under each licence, and what assets were liquid under each licence,” she said.
She urged licensees to review the portfolios of new clients within three to six months of the adviser changing licensees.
“I know that there’s a bit of a debate around when that should be done, but it just doesn’t seem reasonable for a licensee to be taking on that responsibility and not knowing what is [in the portfolio],” said Ms Maynard.
"If I was a licensee or a compliance manager, I’d be saying: ‘We’ve got these new clients coming in – what products are they in? Are they mainstream products? Which are the higher risk portfolios? Which are the higher risk clients? Who do we need to be looking at first?'" she said.
Licensees also need to improve their due diligence processes before they take on new advisers, she said.
“It’s just unbelievable that [rogue advisers] could go from licence to licence and [give poor advice],” said Ms Maynard.
