Advisers ready to fight back

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Members of the Association of Independently Owned Financial Professionals (AIOFP) have had enough of being targeted by heavy-handed regulators, and are uniting to make a stand.

Towards the end of last year the AIOFP voted to implement a trust much like that of the Australian police force. Members will contribute to a central trust fund, which will have a set of rules to protect advisers if they are unfairly treated by ASIC, APRA, FOS or any stakeholders in the market.

AIOFP executive director Peter Johnston said it was time to challenge the harsh determinations being handed down by regulators, but that this required “big wads of money”.

“We need a big brother. We need to say ‘we’ve got $2m in the bank; we’ve got legal advisers’…You don’t just take on one; you take on all of us.”

Johnston used the example of financial planners hit by the Trio fraud in 2009, which lost investors about $180m. He said the advisers were not to blame, but were consequently banned from financial planning on minor offences. Offences that otherwise would have received a ‘slap on the wrist’. Peter Seagrim of South Australia also fought his ban from financial planning, which was based on compliance concerns, and had it reduced from three years to six months.

“There are plenty of examples out there, of where advisers get attacked politically, plenty of examples of determinations given by FOS…the advisers are being harshly treated, and they should be challenged,” said Johnston.

“This is the message we want to get out there in the market place: that we are no longer isolated. We are now all together and if you unfairly, politically or commercially, attack one of our members, we have the resources now to fight back.”

The fund will be discussed further at a conference in Singapore next month.

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  • Peter Johnston - AIOFP on 14/02/2013 11:18:08 AM

    Maurice, Seagrims is a classic case. All clients got their cash back, the parliamentary enquiry found that APRA saw irregularities in 2003 [did not act], research houses/custodians gave it a green light but when the fraud is discovered everyone points to the advisers involved regardless of the mitigating circumstances. Seagrims get audited and find some relatively minor compliance issues which they could find in any practice. They get banned [absolutely nothing to do with Trio]should have got it totally annulled in the AAT, but due to lack of resources defended themselves and missed out on a legal technicality. Upon being banned after 20 years of membership of you know who ads appear in the local paper suggesting that Seagrim clients can seek advice from other local advisers of 'you know who'! 'You know who' thought that the clients had lost money - absolutely disgusting behaviour! That's why the advisers need protection. if they are guilty they do the time.

  • Maurice Nistico CFP on 14/02/2013 9:39:32 AM

    Thanks for clearing that up Peter.. I understand now. You want advisers to contribute to a fighting fund, that will be available to innocent advisers to defend themselves against regulators who obviously are stupid enough to think they can penalise someone who has done nothing wrong and get away with it. I'm in!

  • Peter Johnston - AIOFP on 13/02/2013 10:34:25 AM

    Pat, the facts are 7 of our 150 practices offered Astarra and they were also members of the FPA and AFA. In addition they sponsored all the conferences so please get your facts in order before making uniformed comments. Matthew, you should be working for a consumer group! John, Seagrims clients have ALL of their money back they were in the multi manager funds not the off shore fiasco. Their banning had absolutely nothing to do with Astarra. Due to the politcal exposure surrounding the fraud some one's head had to roll, they were banned for a minor compliance issue and should have had it totally annulled. No the fund is not desinged to protect the guilty, it is desinged to protect the innocent and those decisions are made by a board of trustees in consultation with a legal panel.Yes, it will be available across the advice industry as Insto's are prone to eating their young!

  • john on 12/02/2013 12:45:41 PM

    clearly AIOFP members who 'sold' Trio funds to clients have been found to also be at fault Peter. Seagrims ban may have been reduced, but they were still banned. Are you suggesting setting up a fund to minimise penalties for otherwise guilty parties?

  • John on 12/02/2013 11:21:00 AM

    Why not expand it to all financial planing business owners. I'm in! So much of this countries wealth managed in so few hands as the carve up continues.It's time we all compare the pair and say....fair is fair!!!!Here's a place to start. Get the ACCC involved in looking into the activities of ISN. This Cartel represtents almost 50% of this countries retirement funds. Competiton is the most important thing and ISN is hell bent on destroying it. I don't trust these people as far as I can throw them and Cartel behaviour with one of our most important assets should not be tolerated. Time to dispand ISN and let all funds run on their own two feet.ISN is supposed to be not for profit. Why can't I get information on what the CEO and directors are earning. I'd like to know if their really run to profit members!!

  • GAB on 12/02/2013 11:10:34 AM

    ..and you know the funny thing with FoFA Matthew Lock? These evil commissions aren't covered under the new triplicated fee disclosure requirement.Commissions are exempt...weird don't you think, given it's trail commissions that are apparently so abhorrent to everyone. My adviser fees are fully transparent and come from the client's cash bank account in their platform which i so happen to manage quite effectively, and yet i have to redisclose that and then provide an opt-in letter also? You have to be kidding me. The ISN know exactly where the biggest pool of money is and that's excatly where all the extra red tape is to be found. Uncanny.

  • PAUL LEVY CFP® JP on 12/02/2013 10:20:51 AM

    Thank You, Thank You, Thank You AIOFP. I have long held this view (since FSR was introduced in 2004) that we are being unfairly targeted as a group resulting from some bad behaviour by a few bad apples and crooked fund managers. I am so relieved to see that I am not alone.
    After 37 years of providing advice, I have seen our industry being strangled and kicked and we have not had any unified voice. Contrary to other comments being made here, the vast majority of us are hard working, highly educated,experienced, ethical professionals who have ALWAYS put our clients best interests first.
    This is just what we need, a unified front to stand up and stay "Enough is Enough". More and more Australians are being excluded from seeking advice as a direct result of the ever increasing costly adaptations and changes we are forced to install just to operate.


  • Matthew Lock on 12/02/2013 9:07:02 AM

    While I think a fighting pool is a good idea perhaps it would be better spent however investing in better education, mentoring and perhaps even providing financial assistance to those planners who are going to struggle to make the leap from a commission based revenue model to a more FoFA friendly fee based model...I'm absolutely convinced it will be cheaper in the long run compared to fighting city hall.

  • Pat on 12/02/2013 8:43:21 AM

    So, why were members of AIOFP so involved with selling Trio/Astarra products? Surely, it had nothing to do with the commissions and "marketing payments"?

    Why aren't AIOFP advisers to blame for selling these funds? They are the ones who put their names on the SOAs.

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