Public register for dodgy financial planners aims to clean up industry

Dodgy financial planners will soon be named and shamed on a public register, in a move to make the financial planning industry more transparent and protect businesses and individuals from poor advice.

The register forms part of the federal government’s response to a five-month parliamentary inquiry into the Commonwealth Bank scandal, according to The Australian Financial Review.

It will include advisers’ names, their registration number, qualifications and professional association memberships. Any bans, disqualifications or enforceable undertakings will also be listed.

Finance Minister Mathias Cormann said in a statement the register will be up and running by March 2015, and will be funded by increasing the current ASIC lodgement fee for Australian Financial Services licensees from $5 to $44.

“Our goal remains to ensure that we have a robust but efficient financial services regulatory system, which is competitively neutral so that people saving for their retirement or managing financial risks through life can access high quality advice they can trust and which is also affordable,” he says.

“The government will continue to work with the industry working group and all other interested stakeholders on efficient and effective ways to keep lifting professional, ethical and educational standards across the financial advice industry.”

Mark Rantall, chief executive of the Financial Planning Association of Australia, said he welcomed the announcement.

“This is something we’ve been calling for many years and in fact it’s part of our 10-point plan to raise standards and trust in the financial planning industry,” he says.

“Consumers being able to find who has the highest qualification – and in this case a certified financial planner which is the gold standard, and whether they have had any action against them – is really important for transparency so consumers get advice they can trust.”

Rantall says one of the interesting things to look out for when further details come to light is how the register will define what constitutes a ‘professional association’ as opposed to an ‘industry association’.

“Clearly a professional association has ethics, regulations and enforcement and a commitment to ongoing education,” he says.

“Unless an organisation has that at the most robust level then they’re an industry association, not a professional association.”

Rantall says it is critical for SMEs to access sound financial advice, and the new public register is a step in the right direction.

“Running an SME is probably one of the most rewarding things to do, but also one of the highest risk areas where you’ve got your own capital on the line,” he says.

“You need to be on top of your numbers and getting appropriate advice to ensure your business is not only compliant, but also has a solid plan including cash flow analysis so that you give yourself the best chance of success.”

In May, a Melbourne man who claimed to be a financial planner faced the Magistrates’ Court for his 10-year involvement in a fraud scheme said to be worth $100 million.

This article first appeared on SmartCompany.