Please take the time to read the latest Robinson Sewell Partners’ latest submission made by Ian Joseph to the Parliamentary Joint Committee on Corporations and Financial Services regarding their “Inquiry into Proposals to Lift the Professional, Ethical and Education Standards in the Financial Services Industry” chaired by Senator David Fawcett.

Following is a brief summary of the paper, but to read the full submission please click the DOWNLOAD button at the bottom of the page.

Since the global financial crisis the focus and attention has been firmly placed on those banks and financial institutions who operate in the banking and financial system in Australia especially as their operations relate to advice. The whole system has undergone massive change in the last 20 years and if we were honest, there is now considerable “market failure” when it comes to the level and standards of advice amongst some stakeholders.

Whilst there are currently two inquiries underway, the first being “The Mr David Murray inquiry into the Financial System in Australia” (a comment will be made on this at a later time) this paper will focus on the seven key recommendations contained in the submission which I believe would be a “great start” for the committee to focus on initially.

I believe that all recommendations, reforms or ideas identified and undertaken as a response to this inquiry will be limited in efficacy, if education and training is not the key driver of the change. No stakeholder must be left in any doubt about their own specific roles and responsibilities, so I have come up with 7 key recommendations as follows:

1. Develop the communication, education and training solution around the recommendations from this inquiry. (and not the other way around).
2. Go back to what we know has worked in the past, so I am suggesting a revisit of the disciplines which were identified when the “Financial Service Reform Act” was introduced in 2001, update them, realign them and reinvigorate a national solution.
3. Develop an “Adviser Accreditation Declaration” (AAD) disclosure document to “beef up” the other disclosure documents like the financial services guide and the product disclosure statement.
4. Develop a specialist with specific skills for older Australian’s nearing retirement or already retired and call them “Specialist Retirement Advisor” (SRA) category.
5. Develop a “Financial Advice Insurance Scheme” to protect participants,
6. Develop a “National Minimum Standards – Code of Conduct” to ensure consistency of activity and behaviours of industry participants, and
7. Have a “National Financial Services Reform Conference” to get all stakeholders into the room and on the same page to work out what needs to be done, by who, how, and by when

This is just a high level overview with a lot more analysis, content and evidence contained in the report. If you wish to have a look, I urge you to click on the link and have a read, any thoughts, ideas or suggestions would be greatly appreciated. If I get some good ones, I might be able to put in a supplementary submission.