FPA wants protection for planners who report breaches
The Federal Government’s draft laws aimed at protecting whistle-blowers could have unintended consequences for the way professional groups such as the Financial Planning Association (FPA) monitor compliance with their codes of conduct and administer discipline.
The FPA has used a submission to the Treasury dealing with the new whistle-blower legislation to point out that the new arrangements may serve to undermine the FPA’s approach to dealing with recalcitrant members because information provided to the FPA may not be covered by whistle-blower protections.
In doing so, the FPA has revealed that much of the information it receives about recalcitrant financial planners is received from other financial planners.
“Part of our disciplinary process involves receiving information from individuals about suspected breaches of our professional standards. This can be done either directly or anonymously via our FPA Confidential service. Generally, such information is disclosed by individuals and entities about other financial planners or licensees,” the FPA submission said.
“Important to this consultation is the type of information that is disclosed to the FPA. It is very common that information disclosed about a suspected breach of our professional standards also relates to a suspected breach of a law that would be captured under the draft legislation for the proposed whistle-blower regime,” it said. “For example, a breach of our Practice Standards would usually also be a breach of the best interest obligations in the Corporations Act.”
The submission said that while the FPA’s professional standards and the requirements on financial planners set in the law crossed over, the focus of the FPA’s investigations were on the suspected breach of its Code of Professional Practice.
It said that while the Australian Securities and Investments Commission (ASIC) was recognised as a whistle-blower disclosed under the new legislation, professional bodies such as the FPA did not fall within the definition.
“This means that the disclosing party and the information they disclose to the FPA, would also not be covered for the FPA investigation. If the disclosing party also disclosed the same information to ASIC, the person/entity and the disclosed information would be covered for ASIC’s investigation.”
“We are concerned that as information disclosed to the FPA could potentially relate to both a breach of our professional standards (outside the whistle-blower regime) and a breach of the Corporations Act (inside the whistle-blower regime), that this dichotomy would jeopardise FPA’s ability to investigate claims of misconduct that relied on such information,” the submission said.
“This raises the questions as to the expectations of how entities, such as professional bodies, who may receive information that falls under the whistle-blower regime is to treat such information and the person or entity who discloses the information,” it said.
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