Fighting for your principles
IT’S a pity that when the Financial Planning Association (FPA) urged its members to “take a very good look” at the terms of the enforceable undertaking (EU) agreed to by AMP Financial Planning (AMPFP) earlier this year, that it didn’t also urge them to study AMPFP managing director Michael Guggenheimer’s deft management of the fallout.
By graciously accepting culpability for the conditions leading to the EU, despite AMP holding reservations on its legality, Guggenheimer ensured the resulting adverse publicity, while still significant, has at least being corralled into a finite time period.
The decision not to contest the EU — which found some AMPFP planners did not disclose a reasonable basis for advice when recommending a change in super funds — effectively deprived the consumer media, in particular, of a reason to bash the group, and the industry, for the duration of any ensuing court case.
Guggenheimer, who only two months before the EU had replaced Greg Kirk in the hot seat at AMPFP, also went out of his way to ensure the public knew AMPFP accepted the authority of ASIC as the “umpire” of the “principles-based” Financial Services Reform Act (FSRA), which AMPFP was found to have contravened.
The EU resulted from a review of 300 files selected randomly from 30 AMPFP planners between October and April this year as part of the Australian Securities and Investments Commission (ASIC) shadow shopper program to test compliance with the FSRA.
At the same time, Guggenheimer wasted no opportunity to publicly explain that AMPFP’s approach to advice had always been faithful to its legal interpretation of the FSRA ‘principles’ in the lead up to the group agreeing to the EU in July.
He also emphasised repeatedly that the EU had resulted solely from AMPFP taking a legal view of the ‘principles’ that was different to ASIC’s view in only “one or two” areas.
“Essentially, we took a fairly narrow view of the level of advice you need to give clients on the ‘from’ fund, while ASIC took a wider view of the required level of advice”.
In the tumultuous immediate aftermath of the EU, Guggenheimer also cannily deflected criticism from both within and without the industry by repeatedly warning that AMPFP was not the only dealer group to have “tripped up” on the principles interpretation.
“Judging by what ASIC has said publicly, there are a number of other licensees that it wants to follow up as a result of the shadow shopper survey,” he said.
Guggenheimer has also been sure to keep investors, other stakeholders and the public informed of what the group has been doing to abide by the terms of the EU.
Among these has been an “extensive travel around the country talking to all of our financial planners, impressing on them the importance of demonstrating a reasonable basis for advice in every instance now”.
— Liam Egan
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