Planner complaints rise in 2004

Suspected violations of the Financial Planning Association’s (FPA) code of conduct have increased this year, prompting the association to augment its efforts to investigate questionable member behaviour.

According to the FPA’s annual report, released today, complaints against planners increased to 168 from 146 in 2003 while investigations into contraventions of professional standards increased 15 per cent.

The FPA said the rise in investigations reflected increased vigilance by FPA members and consumers against planners who act unethically.

The most common breaches reported were unethical conduct by omission, which usually involved a failure on the part of planners to declare that a product was in some way linked to themselves or their dealership or that a similar product was available at a lower cost. The second most common complaint was a failure to adequately disclose all costs, usually exit, trailing and on-going lodgement fees within a master trust.

Other complaints included planners giving unsuitable advice due to a ‘one-size fits all’ approach - were a planner offers clients an overly limited range of strategies - and an inappropriate explanation of risk.

The FPA would not disclose precisely how many of the complaints were upheld, only stating that those found breaching professional standards faced a number of sanctions. These included forcing guilty members into further education and training programs, sending in supervisors to supervise spy practice, hitting them with heavy fines (up to $20,000) or suspending or terminating their membership.

However, the FPA did disclose that they had conducted 24 disciplinary hearings, with four matters heard throughout the year relating to charges for unethical or unsatisfactory conduct and 20 matters of academic misconduct. All complaints relating to academic misconduct involved claims of collusion or plagiarism by students on assignments. Fifteen of the 20 students received a fail grade and the other five an ungraded pass.

As was predicted in March, the association reported an operating deficit of just under $2 million, with outgoing FPA chairman Steve Helmich said the association has projected a surplus for the period ending June 2005.