Ethics in the face of Unethical Behavioural

Originally published | 17/02/2019

It is interesting that over the last couple of weeks I have read the diatribes of advisers who are bemoaning the changes that will come about because of the Royal Commission. It is interesting that we have yet to fully hear from the Australian Financial Services Licensees (AFSL) that have been caught up in so much of the misconduct.

The reason why we haven’t heard from them, in my opinion, is because they don’t care. These AFSLs are vertically integrated so the advice component is not important to them. The only thing important to them is selling products. And this leads to unethical behaviour.

When you put the mighty dollar before the client, you open up Pandora’s box and you start to skirt the ethics line.

I have recently seen an example of one of the most well-known AFSLs in this country skirt the ethics line in their behaviour towards one of their representatives.

Before I tell you the story, let me highlight to you that the Corporations Act has outlined specific areas that you need to meet to be considered a whistleblower. ASIC’s Information Sheet 52 (INFO52) provides all of the criteria and also sets out three key protections for whistleblowers. These are:

  1. Protection of information provided by the whistleblower
  2. Protection of a whistleblower against litigation; and
  3. Protection of whistleblowers against victimisation.

This last protection, in my opinion, is the one that most whistleblowers are concerned about.

The ramifications.

They’re generally concerned that if they highlight poor or unethical behaviour that they will be the target of repercussions and not the offending party.

And it is this protection that has been violated by one of the largest AFSLs in this country.

I won’t name names, as this would lead to action being taken against me, but the behaviour I have recently read about continues to highlight why we needed a royal commission but also why Justice Hayne failed to take action against the largest perpetrators of misconduct.

I was recently reviewing an application for an adviser to transfer to our licence. In the section where we ask about reasons for leaving the last licence and any action taken by the previous licence against them, this adviser outlined that he was terminated by the previous AFSL after 30 years with them. The reason, he had highlighted misconduct of another adviser to the management of that AFSL. Their reaction terminates this adviser.

So how does someone, anyone, identify misconduct in that AFSL and then report it, as they should, when they will be victimised by the AFSL.

As an industry, we are trying to become a profession, part of being a profession is to have strong ethics. Unfortunately, as we have witnessed time and time again, where money is involved, ethics gets put on the shelf.

We have to expect better.

Although accredited to Lieutenant General David Morrison, it was actually the current Governor of New South Wales, General David Hurley, who said “the standard you walk past is the standard you accept”.

Don’t walk past and accept misconduct. Report it.


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