Dob in a dealer: plan to uncover code breakers
The Financial Planning Association (FPA) has been forced to defend itself against accusations that it will not be able to police its own self imposed get-tough codes on soft dollar payments and commission based remuneration.
While the association has been talking tough and warning of heavy fines for members who flout the new codes, it was forced to acknowledge last week it will rely heavily on the industry itself to uncover transgressors.
The FPA released its latest conduct guidelines earlier this month, requiring advisers to disclose all payments received for recommending platforms or funds management products as ‘commissions’.
The guidelines came on top of the FPA’s previously announced code on soft dollar remuneration, which bans some forms of soft dollar payments and requires others to be disclosed.
The FPA has warned members who do not comply with the codes could have their membership cancelled and face fines of up to $20,000.
But at a forum for members in Sydney last week, chief executive Kerrie Kelly was forced to defend the association against questions that it would not have the resources to police the codes.
Kelly said the association had three in-house staff who would be responsible for enforcement. However, she acknowledged the FPA would have to rely on members reporting on rival groups to catch those who do not comply with the codes.
“The primary obligation is on the licensee to make sure they comply,” she said.
In an interview with Money Management after the forum, Kelly dismissed suggestions some FPA members would get away with breaching the codes, saying she expected dealer groups to report rivals who were acting inappropriately.
She said financial planning groups who did not want to comply with the codes had no place in the FPA.
“As a member of an association, you only belong if you agree to be bound by its codes,” she said.
“It is not in the interests of any member of the FPA not to comply because otherwise there is no reason to be a member of the FPA.”
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