Adviser Civil War

Originally published | 9th January 2017

“Our very strength incites challenge. Challenge incites conflict. And conflict… breeds catastrophe.”

Does this sound like our industry?

Captain America: Civil War is the Marvel Cinematic Universe’s adaptation of the Civil War comic series in which the United Nations is preparing to pass the Sokovia Accords which will establish a panel to oversee and control the Avengers. The comic series is actually broader and encompasses the United States Government passing the Superhero Registration Act.

Something striking a similarity at the moment.

Prior to FSR (Financial Services Reform) there were multiple and confusing licensing regimes for financial services providers. If I dealt in securities, futures and superannuation, I needed a licence, however, if I advised on insurance, but didn’t arrange it, I didn’t need a licence.

The Wallis report changed this and introduced licensing for financial product advice. This was a good step, but we still saw some in the industry take advantage and not licence advisers if they were under one umbrella licence.

“We need to be put in check. Whatever form that takes”

The FSR licensing regime in itself lead to some issues to the extent that the Future of Financial Advice Reforms (FoFA), which were implemented in 2013, required all financial advisers to be registered.

Is it sounding eerily similar now?

If you surveyed the industry prior to FoFA, some would have been like Tony Stark (aka Iron Man), who was in favour of registration. Others however would have been like Steve Rogers, aka Captain America and would say something similar to, “We try to save as many people as we can.  Sometimes that doesn’t mean everybody, but you don’t give up”.

What we have seen from the introduction of the adviser register is that it is very easy, not only for consumers, but industry participants, to track the movements of financial advisers. It is easy to see whether an adviser has moved frequently, which may lead to questions, or whether they have had any disciplinary action taken against them.

I’m a Captain America fan, but in this scenario, I would have to side with Tony Stark. I believe that because of the minority, as an industry, we have to admit that “If we can’t accept limitations, we’re no better than the bad guys.”

And as much as it is good for compliance professionals out there to have some bad eggs to chase, cleaning up the industry is a positive and keeping track of those who do the wrong thing means you are protecting your clients.