New laws regulating financial advisers will see the big four banks and AMP funding an independent body to oversee professionals standards in the troubled wealth management industry.
The federal legislation, to be introduced to parliament later this month, will mandate professional standards for financial advisers, including qualifications, exams, continuing education and a code of ethics.
“This independent standards body will raise minimum standards in the financial advice industry and improve public confidence in the sector,” says Kelly O’Dwyer, the minister for financial services.
The wealth management industry has been hit by a series of scandals where customers have been given bad advice and lost life savings and retirement nest eggs.
The big bank CEOs have already been questioned in a parliamentary committee on their track record and whether any senior executive had lost their jobs because of poor financial advice.
The Australian Financial review says that the corporate regulator ASIC will next week release a report that reveals the big banks and AMP have been shortchanging customers tens of millions of dollars by charging them for services they didn’t get.
The professional standards legislation will establish an independent standards body, funded “exclusively” by the large banks and AMP, the biggest players in the wealth management industry.
The new professional standards regime will start January 2019. Existing advisers will have until January 2021 to pass the new exam and until 2024 to reach degree-equivalent status.
Professional associations and other independent third party monitoring bodies will develop compliance schemes to monitor and enforce advisers’ adherence to a code of ethics. These compliance schemes will be approved by ASIC.
O’Dwyer says the reforms ensure financial advisers will be held to a high standard of ethics, with non-compliant advisers subject to disciplinary action and sanction by the monitoring bodies.