In a letter addressed to finance minister Jane Hume and ASIC char Joe Longo, the Association of Independently Owned Financial Professionals has asked for urgent clarification of the exclusion of banks from the CSLR, a move that is being perceived as an attempt to abrogate their past and future obligations.
The letter, inked by AIOFP executive director, Peter Johnston, points to the banks’ failures which have led to a “compliance overload” and in turn have inflated the cost of advice. The banks now look to be free of CSLR obligations, despite arguably being the culprits of the industry’s fiascos.
“The advice community are furious with continually being blamed for the actions and incompetence of other stakeholders; it is time for them to be held accountable,” Mr Johnston wrote.
“The Minister’s comments around the CSLR and allowing bank/institutions to escape scrutiny and accountability defies logic. Quite simply, they are the major reason why these products have failed and to exclude them is a travesty of justice for consumers,” he noted.
He drew on recent data from the Australian Financial Complaints Authority (AFCA), which revealed a staggering 98.5 per cent of all complaints from consumers are against the banks.
“Let’s make it very clear that banks manufacture/manage financial products, consumers/advisers invest/advise on them and ASIC releases/registers them for market consumption. Why are you trying to exclude the major player from culpability if their product fails?,” Mr Johnston asked.
He also demanded an explanation in regards to the government’s decision to change the CSLR commencement dates recommended by Commissioner Hayne.
“It seems there is pressure from certain parties not wanting exposure to past poor management, surely the best interests of consumers must come first.”
Asking for “more rigor” around the quality of products disseminated by the banks, Mr Johnston argued that “being proactive in preventing product failure must be better for consumers than allowing dodgy products/operators onto the market then dealing with consumer misery”.
“We are certain consumers would assume that ASIC have analysed a product before market release, and they would not want to see product manufacturers excluded from a compensation fund,” said Mr Johnston.
Stressing the need for a better approach, Mr Johnston concluded that “it seems this government cares more about the banks and protecting their welfare than that of consumers.
“The inconvenient truth is the banks have been the major cause of failure in both advice delivery/product manufacturing over the past 30 years and having he financial sector council trying to push the cost of product failure back onto advisers and consumers via advisers PI Insurance is pitifully self-serving to say the least,” he concluded.
