Dealer groups take the hint

The Australian Consumers’ Association (ACA) andAustralian Securities and Investments Commission(ASIC)Quality of Advicesurvey named 10 groups that had produced at least one ‘very poor’ financial plan.

Individual plans labelled ‘very poor’ came from the ANZ Bank,Securitor,PACT,Charter Financial Planning, Bell Potter, JB Were,ProtaxandTolhurst Noall, with two each fromAMPandMawsons.

At the time of the survey’s release, the regulator warned it would be carefully examining these dealer groups to ensure that any compliance issues were rectified.

An ASIC spokesperson says after the report was released, the regulator did hold one meeting with the groups that had a ‘very poor’ plan and explained to them the deficiencies in the plans.

However, the spokesperson says over the past 12 months the main focus of the regulator has been on the implementation of the Financial Services Reform Act (FSRA).

“A lot of the deficiencies that were observed would be rectified through FSR, so that is where most of the energies are being directed at the moment,” the spokesperson says.

However, it appears the groups that had a plan labelled ‘very poor’ found the survey, and their one meeting with ASIC, enough to prompt a review of their systems and compliance procedures, and implement improvements.

St Georgehead of dealer services Paul Cullen says he believes there is no doubt that as a result of theQuality of Advicesurvey there has been a definite systemic improvement in the way advice providers in the market operate.

Mawsons, which had two plans labelled ‘very poor’ by ASIC alongside AMP, was one of the hardest hit by the regulator after being asked to participate voluntarily in an extensive compliance review.

This meant engaging an independent consultant who undertook a review last November. The review involved interviews with the group’s advisers and compliance manager and the submission of a report to both ASIC and Mawsons.

Mawsons chief executive Les Mace says the group was happy with the process of the review and has “learnt some things along the way” that enabled it to improve its quality of process. The group has recently provided ASIC with feedback from the report, but is still waiting on final comments from the regulator.

AMP Financial Planning chief operating officer Neil Macdonald says though his group had two ‘very poor’ plans, it was in the process of implementing a compliance program that began in July 2002 to prepare the group for its FSR licence application and post-FSR ongoing compliance.

Macdonald says the survey and a meeting with ASIC made the group look back and focus more closely on the details of the implementation of this compliance program.

The group also developed a new ‘client charter’ initiative largely in response to the survey that facilitated more client feedback.

Another of the groups, ANZ, as well as improving the procedures within its compliance program, outsourced its advice auditing process toIntegratec, which now involves a large number of random checks per year on the quality of advice produced by its advisers.

Current ANZ Financial Planning general manager Dean Nalder says the group also deepened the development of new advisers, extending the induction process for new ANZ advisers to a full 12 months.

Charter Financial Planning national manager Bruce Birchall says his group went back and had a look at the distribution network, and placed a greater focus on the quality of advice in its adviser personal development days. And Bell Potter Securities established a control procedure that enables monitoring of the financial plans that are being written.

“At the end of the day, we all have the same things we have to look after — we want clients to be happy with the advice they receive,” Macdonald says.