The Federal Government’s Future of Financial Advice (FoFA) reform package has profound ramifications for the financial planning industry at both the behavioural and legal level, according to one of the chief architects of the package, Dr Deen Sanders, in an opinion piece published by the Centre for Law Markets and Regulation, on its new UNSW website.
The reforms were passed by the House of Representatives last night.
Dr Sanders, the independent Chief Professional Officer for the Financial Planners Association, argues incentives for financial planners to belong to a professional association with an approved professional code are a positive and essential change.
His article is published on a new online portal, hosted by UNSW’s Centre for Law, Markets and Regulation (CLMR). The portal is designed to track international regulatory developments in the aftermath of the Global Financial Crisis.
“Professional Codes, when properly constructed, speak to a communal concept of professional obligation and ethics ... When properly policed they respond to a far wider set of concerns than does the law and provide far greater consumer malpractice protections than the law ever can.”
However, while the reforms will go a long way in preventing “egregious failings” by individuals “the genuine source of the evil is far more likely to be in the financial services laboratories that invent these products in the first place,” Dr Sanders says.
“We are seeing this in the guilt-fuelled disclosures of people such as ex Goldman Sachs executive Greg Smith, who acknowledge that even many of the ‘financial scientists’ and executives who invent and package these instruments into shiny new baubles often have little idea or concern about what it is they’ve built or what consumer consequence might result.
Dr Sanders says consumers also may not be without blame. “The ‘evil mastermind’ that requires eradication might not reside in large corporate towers around the globe but may well be lurking in our own concept and attitudes to finance and our active (if even unwilling) participation in that system as consumers.”
Read Dr Sanders' article here.
Media contact: Steve Offner, UNSW Media Office | 02 9385 8107 | 0424 580 208