The banks are not coming out of this looking good. Potential criminal charges. Misconduct and lying to ASIC. Executive bank salaries based on the 'performance' of their advisers which in turn are based on sales targets. Some advisers having such a limited choice of funds to select from that they can't meet the 'best interest' duty for a client. A high profile celebrity 'media star' adviser giving incompetent advice.

The one missing ingredient in all of this is ETHICS.

Ethics forms almost an entire unit when completing the CFP qualification (Certified Financial Planner). In fact, it is the initial subject. Topics include:

  • Ethical decision-making and judgment
  • Relationship between ethics and business
  • Professional responsibility
  • Relationships between law, professional stands, ethics and competence

In almost every example explored in the Royal Commission, there has been a failure of ethics. If an appropriate 'ethical framework' were applied, most of these issues simply wouldn’t have become problems in the first place!

While there are different theoretical models that can be applied, you can simplify them in most instances. When applying them to Financial Planning clients, you can simply ask a few questions.

  1. How would I feel if the decision were on the front page of my local newspaper?
  2. How would I feel if all of my professional colleagues were aware of the decision?

It's usually not that hard to come to the right decision.

There are however, likely to be big changes as a result of the misconduct uncovered. In the summary given on Friday, the role of Dealer Groups that hold the financial services license was questioned and the possibility of individual licensing was raised. The regulators role has also been examined, together with, if banks should be licensed to own both investment funds and also give advice on them.

We'll have to wait for the recommendations. I just hope that they deal with the actual issues raised. We’ll be following this one closely and will advise when they are handed down.

But don't hold your breath. The final report isn't due until 1st February 2019.


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Brett Dillon is an Authorised Representative (No: 265081) of BD Financial Advisory Pty Ltd (AFSL No: 502401).
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