FPA whistleblower facility identifies problem areas
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FPA Confidential has resulted in 12 formal investigations since it was launched in February, with most of the affected advisers accused of recommending investments they are personally involved in.
The Financial Planning Association’s (FPA’s) anonymous online reporting facility, developed in conjunction with Deloitte Touche Tohmatsu, has been an effective tool for identifying areas of investigation, according to FPA deputy chief executive Deen Sanders.
Sanders said of the 12 investigations, five were considered to be in the high-risk category, while one was in the extreme risk level and was expected to result in disciplinary action by the FPA. Sanders said that if the FPA suspected or had evidence of a breach of the law, it was required to report it to the appropriate authority. As such, he said, one case had been passed on — although whether or not action would be taken was now out of the FPA’s hands.
Sanders said the majority of complaints tended to arise when people had lost money and believed they had received inappropriate advice. He said the investigation had found that advisers had often recommended non-approved products.
“There are lots of people who chose to make a recommendation to a client about a product that they are personally involved in,” he said, adding that it was not always a managed investment product but often their own personal investment scheme.
Sanders pointed out that FPA members were not often involved in these types of complaints, because they tended to be more familiar with the law — as well as their responsibilities and obligations.
“Much of that very dangerous advice provision doesn’t come from FPA members,” he said, adding that nonetheless they gathered information and passed it on where they could.
Sanders said FPA Confidential reflected activity in the marketplace.
“So where there is a real issue or concern bubbling away, we’ll often hear about it. It has been quite effective in informing us ahead of time,” he said.
However, he pointed out that it was just a part of a more open-faced approach to investigation and intelligence, adding that the FPA received up to 10 calls a month. In most of these cases the people had evidence to back up their complaints and were therefore not worried about indentifying themselves.
“The very best detectives in this process are other financial planners in the community,” he said, adding that almost all financial planners know about what is happening in their marketplace and local communities. “We have a very frequent and ongoing stream of intelligence flowing to us about concerns in the marketplace.”
He said FPA Confidential was helping the FPA progress any investigation or action against wrongdoers more quickly, and was also helping the FPA communicate with the Government and the Australian Securities and Investments Commission about where the concerns in the marketplace were.
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