http://www.crikey.com.au/2014/07/04/regulation-by-mateship-ian-and-mathias-show-the-way-in-financial-planning/

Regulation by mateship — Ian and Mathias show the way in financial planning

 

|Jul 04, 2014 1:02PM

 

We’re headed for an era of mateship-based regulation in financial planning, in which the big banks will get away with as much as they can until governments decide it’s politically unpalatable................... 

With all the focus on the Commonwealth since the inquiry, the ostensible sector regulator, the Australian Securities and Investments Commission has gotten off lightly. Remember, this is a regulator so gobsmackingly inept that it not merely ignored repeated efforts by whistleblowers to alert it to what was going on at CFP, when the CBA itself alerted ASIC to the activities of one of its worst planners, ASIC simply lost the report.  And that was before it had its budget significantly cut, as it did in May.

The result — $50 million so far in compensation for clients of the CBA, and almost certainly tens of millions more in further compensation, not to mention the losses inflicted on the wider financial services sector as potential customers turn away from financial planning, unable to trust planners.

You can bet your entire retirement income stream that if an industry super fund had behaved as the CBA behaved, a handpicked Coalition crony would already be heading a royal commission. Instead, the government has worked assiduously to deregulate the retail super sector.

We have an idea of the kind of 70s-style, mateship-based regulation model that will flow from this. The big banks will be permitted to gouge, rip off and exploit financial planning clients, with no intervention by a toothless, underfunded regulator, and allowed to mislead parliamentary committees about their actions, with no repercussions, until they go so far that it puts political heat on the government. At that point, the regulatory mechanism will be a government minister — say, Mathias — picking up the phone to a CEO — say, Ian — and urging them to back off and offer compensation because it’s all looking too embarrassing.

We know this is the regulatory model because, with the government’s gutting of FOFA, the past in financial planning is the future.