FPA clarifies Westpoint comments amid criticism

The Association of Independently Owned Financial Planners (AIOFP) has criticised the Financial Planning Association’s (FPA) comments last week that investors, not planners, were responsible for money lost through investments in Westpoint-associated products, while the FPA has clarified its position on adviser responsibilities.

In a statement released to AIOFP staff today, chief executive officer Peter Johnston said the public needed to be reassured that if their investments went awry, planners and the industry would stand by them to correct the situations wherever possible.

He said the AIOFP had established a recovery committee to support its affected members and their clients, which would provide the Australian Securities and Investments Commission (ASIC) with market intelligence and paper trails on past Westpoint Corporation correspondence.

He said it was important that planners cooperate with the regulators to ensure the “finger of blame” was pointed in the right direction.

Meanwhile, FPA chief executive officer Kerrie Kelly today reiterated an FPA spokesman’s comments to Money Management last week that financial advisers have a duty to clearly explain any higher risks associated with recommendations given to investors.

“The financial plan and any associated product recommendations must take account of the client’s risk profile and be appropriate to the client’s specific situation,” she said.

“It is a fundamental consideration in financial planning that investors be able to have confidence that advisers make recommendations which are appropriate to their needs.”

Kelly said the FPA was keeping the matter “under close review” as ASIC continues its investigations, and would take appropriate action if complaints were received.

“If complaints are received about FPA members acting improperly, they will immediately be investigated and, if proven, sanctions will be imposed on the members concerned,” she said.