Cheating rife in financial planning

In addition to the PJC inquiry, Cormann has also set up an industry working group taking in everyone from Knight to the AFA’s Phil Anderson (formerly head of risk management and compliance at CBA’s troubled advice arm, CFS) to ASIC commissioner Peter Kell. “The industry working group will also consider further improvements to professional, ethical and educational standards for the financial advice industry,” he says. “This will include consideration whether the minimum standards set out in RG146 adequately reflect the knowledge and competency that is required to provide sound financial advice and how standards should be enforced.

Mackay says Australians have seen recurring examples of rampant abuse of consumers and a lack of professionalism shown by the advisers they trusted, and he warns thatonly the ability of Australians to identify and place their trust in competent, ethical and more highly educated professional financial planners will re-build confidence in the nation’s markets. “Increasing education standards is a crucial element to lifting professional standards,” he says. “If we want to be perceived as being on the same professional level as doctors, lawyers and accountants then completing tertiary education and a professional designation is critical.

Tim Mackay, a certified financial planner at independent financial advisory group Quantum Financial, is one of a number of independent advisers who have been lobbying for higher standards of education for years.  He says lifting education standards will establish the basis for a sustainable long-term future for financial planners. “Most importantly of all, the public interest will be served by a trusted group of people who will be regarded as true professionals.

He says he saw plenty of cheating on continuing professional developments during a stint as a financial planner, before he went into the education business. ‘‘Even back then it [cheating] was pretty rife, planners getting their assistants to do it and that kind of thing,’’ he says. “That hasn’t really changed.

Macquarie Group is also believed to be a client but a Macquarie spokeswoman refused to say, when asked, if the company used Kaplan. ‘‘If you did the first four subjects, that would allow you to provide advice in life insurance and superannuation, financial planning, managed investments and securities,’’ Knight says. ‘‘You can then add on things like derivatives, margin lending, other courses if you want.

Membership of his organisation requires at least an undergraduate degree, and to earn the flagship CFP accreditation advisers must pass a rigorous exam. “The FPA announced in 2011 that membership would be restricted in future to those that hold, as a minimum, an approved university degree," he says. "It is widely acknowledged that the community now expects those responsible for their financial well-being to hold, as a minimum, degree qualifications and in addition professional certification from a professional association.

In just two paragraphs, the guide says financial service licensees are required to  ‘‘implement policies and procedures to ensure that their advisers …  undertake continuing training to maintain and update the knowledge and skills that are appropriate for their activities’’.

Last month CBA made a pre-emptive strike and announced it would lift education standards, committing that any financial planner and their managers who don’t have relevant tertiary education must complete the Advanced Diploma of Financial Planning by 2017, which has eight compulsory units to RG146’s four, and senior financial planners would be required to obtain the “Certified Financial Planner” qualification by that date.

A Fairfax Media investigation can reveal that two experienced planners in CBA’s Western Australian division were recently terminated after being caught getting their juniors to sit the test for them. “Recently we became aware that two employees in Commonwealth Financial Planning (CFPL) acted inappropriately during the completion of their mandatory training; one was in relation to Certified Professional Development (CPD) and the other was non-CPD training.

Read more here: SMH


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