Hot topic of the week….

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ASIC coined a new buzz word in its Financial System Inquiry: Bad apples. It used the term to describe unethical advisers in the industry, and attack what it believed to be a “real and significant” problem. A multitude of readers took to the board to show their disdain.

GAB pointed out that they already have ongoing exams and professional development, and didn’t agree with ASIC’s proposal of implementing a national examination: “Some ‘rotten apples’ have embarrassed ASIC so we all must be treated like a leper colony.”

It would be surprising if the “bad apples” accounted for more than 1% of licensed and regulated advisers, and Australia has bigger problems such as underinsurance, financial literacy, and churning, said Anthony K.

Adviser B pointed out that competency exams shouldn’t have any relevance to whether an adviser is “dodgy” or not. This a knowledge gap is a completely separate issue.

“For ASIC to suggest getting to the "bad apples" is not possible as they change licensee, is symptomatic of the entire problem with licensing,” said James Howarth. “All advisers should be licensed directly with zero onerous requirements other than educational barriers. Then if ASIC get direct complaints, remove the direct licensed adviser.”

ASIC spends too much time on the little fish and not enough on big company product manufacturers, said gf in Bris, while alleycat wanted to know exactly what percentage of bad apples existed within the planning industry.

Peter Corrie agreed and said the bad apples were few and far between: “I don't think ASIC realize that they are a real discouragement to existing advisers and do little to encourage prospective advisers entering the financial services industry.”

Read the article and see more comments here.

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