Royal Commission Investigation into Misconduct of the Banking, Superannuation & Financial Services Industry
Over the last month we have seen plenty of media attention surrounding the Royal Commission’s investigation into Banking and Financial Services.
We felt it would be helpful to you for us to provide you with our preliminary thoughts.
Firstly, we strongly commend the work of the Royal Commission and how they have highlighted many instances whereby the poor culture of large institutional financial services businesses has led them to prioritise profits over consumer outcomes.
This has been demonstrated by:
- Clients being charged fees for services that were not provided;
- A priority for product sales outcomes over advice outcomes;
- Lack of professional accountability for mistakes;
- Lack of consequences applied to offenders;
- Misleading the corporate regulator;
- Advice being delivered that did not meet what should be considered the very minimum standard of all Financial Advice – being the client’s best interests. More disappointingly, when these instances were discovered, little or no action was taken to rectify the situation.
This behaviour has only served to undermine confidence in the Financial Advice industry, particularly when it has come from some of our largest and most well-known Financial institutions.
One of the reasons we have elected to license our business under a licensee such as Fortnum Private Wealth is to be part of a business that:
- Does not generate its profits from selling products;
- Focuses on client outcomes; and
- Focuses on assisting its’ Financial Advisers in providing advice that is in the client’s best interest.
- Our business is focused solely on these outcomes for you.
- As calls for change on the governance and regulation of the industry grow louder, we expect that the landscape in the Financial Services sector will change dramatically as a result.
Most notably, we foresee a greater separation in Financial institutions having the ability to both own investment products (i.e. such as managed funds) and provide advice related to these products (or ownership of advice businesses).
This change will see more of the industry and our peers moving to a model that we operate under today.
The separation of advice and product.
In addition, client’s will be more diligent in selecting their Financial Adviser, and seek out advisers who uphold the following standards:
- Only providing Financial Advice that is in the client’s best interest. Furthermore, ensure that any advice provided considers your wider financial position and overall goals (not focused to a single area of advice such as the assets you own).
- Greater accountability and transparency on:
Conflicts – ensuring any potential conflict or issue that may arise to become a conflict is thoroughly disclosed to you.
Fees – providing complete transparency on our service proposition and fees you are charged for those services.
- A commitment to professional conduct and accountability