HomeView 2015 Media ReleasesFinancial Adviser Register a step towards transparency

The Customer Owned Banking Association says the new financial adviser register will boost transparency and help consumers distinguish genuinely independent advisers from major bank shopfronts.

The Customer Owned Banking Association says the new financial adviser register will boost transparency and help consumers distinguish genuinely independent advisers from major bank shopfronts.

“COBA is a strong supporter of measures like this to enhance consumer confidence and trust in the financial system,” said COBA CEO Mark Degotardi.

The financial adviser register, commencing at the end of next month, will disclose the firm that controls the licensee who authorises the adviser.

The Government’s Explanatory Statement for the register says:

Currently, many financial advice firms are controlled by firms that issue financial products, and consumers are often not aware of a relationship between an advising firm and particular financial products. This lack of transparency about the context of the advice can contribute to a lack of trust in the financial advice industry.

“The same principles of transparency and consumer empowerment should apply to sub-brands in retail banking and mortgage broking,” Mr Degotardi said.

“Major banks use sub-brands to lure consumers who don’t want to bank with a major bank. Major banks own, totally or substantially, broking groups comprising an estimated 40 per cent of mortgage brokers. Consumers deserve effective disclosure about who they’re really dealing with.

“ASIC has warned about significant and continuing consolidation in the funds management industry and the challenges of vertical integration in banking and along the product distribution chain. Similar observations are made in the final report of the Financial System Inquiry.

“Transparency about ownership will help empower consumers to avoid dealing with entities that have a record of acting against the interests of consumers.

“The most effective way to deter such conduct is to ensure that the entity can’t hide behind subsidiaries and sub-brands,” Mr Degotardi said.

See below for background on the policy debate leading to the enhanced Financial Adviser Register.

For more information please contact:

Daniel McDougall, Senior Manager – Media and Communication

02 8035 8444 or 0407 637 541, This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Customer Owned Banking Association is the industry body for credit unions, building societies, mutual banks and friendly societies.  See coba3.nexusone.com.au

Establishment of the financial adviser register was recommended by the June 2014 report by the Senate Economics Committee into the performance of ASIC. The Committee examined misconduct that occurred between 2006 and 2010 by financial advisers and other staff at Commonwealth Financial Planning Limited (CFPL), part of the Commonwealth Bank of Australia Group (CBA).

The Committee found that: “Advisers deliberately neglected their duties and placed their personal interests far above the interests of their clients. The assets of clients with conservative risk positions, such as retirees, were allocated into high-risk products without their knowledge to the financial benefit of the adviser, who received significant bonuses and recognition within CFPL as a 'high performer'. There was forgery and dishonest concealment of material facts. Clients lost substantial amounts of their savings when the global financial crisis hit; the crisis was also used to explain away the poor performance of portfolios.”

The Committee identified major flaws in the ASIC-sanctioned compensation process, including “no allowance made for the power asymmetry between unsophisticated, and in many cases older and vulnerable clients, and CFPL” and “numerous allegations of missing files and key records, of fabricated documents and forged signatures that do not seem to have been investigated.”

The Committee formed the view “that the CBA deliberately played down the seriousness and extent of problems in CFPL in an attempt to avoid ASIC's scrutiny, contain adverse publicity and minimise compensation payments. In effect, the CBA managed, for some considerable time, to keep the committee, ASIC and its clients in the dark.”

Financial System Inquiry Final Report:

“To build confidence and trust in the financial system, firms need to take steps to create a culture that focuses on consumer interests.”

“…high concentration and trends towards increasing vertical integration in some sectors of the financial system have the potential to limit the benefits of competition in the future.”

“Often consumers do not understand their financial adviser’s or mortgage broker’s association with product issuers. This association might limit the product range an adviser or broker can recommend from. Of recently surveyed consumers, 55 per cent of those receiving financial advice from an entity owned by a large financial institution (but operating under a different brand name) thought the entity was independent.

“The Inquiry believes greater transparency regarding the nature of advice and the ownership of advisers would help to build confidence and trust in the financial advice sector.”

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Media Contacts

Mick Gibb
Corporate Affairs Manager
P: +61 2 8035 8444
M: +61 423 149 494
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