Medcraft furious over "absolutely appalling" advice

Great job Greg Medcraft. You have just confirmed your failure as ASIC Chairman. Don't look now but you are responsible for regulating the industry/profession. Don't blame the profession, the FPA has been trying to make you and your predecessors listen to their pleas for increased education standards and practicing standards for decades - but no, all you can manage to do is react and run useless shadow shopping exercises.

The fact is that Australia leads to world in professional financial planning practicing standards, education and ethics. It is a small minority of planners that cause the problems, similar to all professions. It would more helpful to all concerned if Mr Medcraft represented the majority of fine financial planners who do the right thing in protecting the community and making a positive difference.

But of course it is much easier and topical to stand up at the press club and throw some rocks.

It is time to stand up and be counted Mr Medcraft. You head up the regulator - start regulating and we'll all be better off.

I am sure this article is going to arouse a lot of rational and irrational comments from readers. Isn't it sad that a relative newcomer to the sector has formed such a poor opinion. Unfortunately the comments made by Mr Medcraft, whether rightly or wrongly, paint the financial services sector in a poor light. Whilst there have been many reports of the public having received poor advice, let's not lose sight of the fact that many Australians have been placed in a far better financial position as a result of having received quality advice.

Let's not throw the "baby out with the bathwater".

Unfortunately a national exam, on its own, is not going to fix the problem.

Perhaps the answer lies in less red tape attaching to the advice process, and the removal of the need for advisers to be providing 70 page Statements of Advice, just to cover themselves and their licensees requirement. I think it is time for a balanced approach where the regulator and industry participants work side-by-side to build a better future for all stakeholders.

By chance I saw the telecast of this and his 'emotion'. He certainly was fired-up.

However, I'm still not convinced that if we had a national exam in place 10 years ago that ASIC would be seeing a lot less 'casualties'.

One of the justifications for the recent FOFA Disallowance was the investors in Timbercorp etc. Given that (as I understand) a large proportion of the 'investments' were encouraged or recommended by Accountants , many of whom you would expect to pass such an exam (or were unlicensed and having others implement the strategy), then how would this be different?

What's different now is that there aren't the large commissions payable, as there was then.

These comments from the industry regulator are a disgrace. Just about every 'big' failure has been after warnings were given to ASIC but they did not act. ASIC should be doing their best to build confidence in the industry. As anyone of Medcraft's standing should know, it is only a few advisers who are the bad eggs.

Medcraft's bias which filters down through his organization should disqualify them from being the regulator.

One could be the most astute academic, get 100% results in an exam and then go out and provide poor financial advice.

Cast your mind back to when you gained your drivers licence. At every corner you used your indicator. Every time you changed lanes, you checked your blind spot. You got your licence.

It didn't mean that you then became a better driver.

If you don't practice what you learned, having 300 driving lessons (or an ASIC exam) will do NOTHING to change the behavior of those not willing to do the right thing.

Make the licensees responsible for the education of their advisers and ASIC, you do your job.

As an investment banker, maybe Mr Medcraft should look into a mirror and see what investment bankers have done to the world !! - In fact, maybe he should consider that but for the investment banks, we may not have had so many product failures that have caused so much of grief to so many people !! - It seems ok to allocate all the responsibility to planners BUT there is much more to this entire industry than advice from planners - For example, what were the bankers, lawyers, accountants, rating agencies and others involved in Timbercorp, Storm etc doing while all this was going on?

Why not take a model that works such as the medical industry - Understand the difference between product creators (pharmaceutical companies), product assessors (Government) and then advisors (Doctors) - This could be a proven solution - The Government could levy the product creators for its costs to assess the validity of the products in the first place , then advisors could be trained appropriately to implement the product, after passing accreditation !!

I'm glad to see Mr Medcraft was emotional when he sees the casualties of bad advice - so are most advisers as we just hate seeing bad advice.

The problem is that when we report it, nothing gets done and after repeated attempts you simply give up.

Rather than rant and rave at advisers, how about speaking up for more resources and a better way for ethical and professional advisers to support ASIC in its enforcement.

Medcraft, I too am heartbroken - by your former profession and career....an investment banker, and Head of Financial Engineering at Soc Gen.

It has broken my heart to see many investment banks single handedly financially engineer the worst financial crisis in around 100 years. Tens of millions of Americans evicted from their homes and living in caravan parks, industries shut down over night, millions unemployed, and untold suicides.

The investment banking industry has settled fines with the US Securities and Exchange Commision, amounting to at least $50 billion, without admitting liability (of course), for mass-marketing worthless dud investments to everyone from global pension funds, Australian councils and charitable organisations. Why? So they could pocket their $20 million bonuses for hitting their sales revenue targets and remove the toxic assets from their employer's balance sheets.

A handful of failed investment products in Australia pales into comparison to the trillions of dollars wiped from householder's balance sheets caused by your investment banking colleagues.

Clearly the regulators efforts have not been good enough. So time to stop nudging and time to step up.

If this is reported accurately then it is extremely disappointing that a supposedly senior industry figure would use inflammatory and generalist commentary to criticise an entire sector, the vast majority of whom deliver outstanding advice and support to their clients.

This sermon can best be summed up by the admitted failure of his "nudge nudge" approach, whatever that is meant to mean. Continuing to do the same thing and expecting a different result I was told is the definition of stupidity.

It would be far more beneficial to at least balance the commentary with an acknowledgement that ASIC is a participant in an industry that has many positives and some failures to which all participants contribute and have an obligation to continue to improve.

The percentage of financial advisers who give "bad" advice is small. The percentage of advisers who give - in the eyes of ASIC - non-compliant advice (which they call bad) is larger but still small. The relevant qualifications and training have little to do with these levels and another exam won't fix anything.

I know of one product provider who provided information to ASIC about Storm's methods years before everything hit the fan.

If the regulator sits on its hands for years and does nothing about these things, other advisers who are aware of ASIC's inaction will only naturally believe that ASIC sanctions the bad advice. How much less damage would have been caused in other situations and concerning other licensees if the regulator had acted early and decisively?

Medcraft has a cheek when the 7 years he has been at ASIC represent the same seven years over which all of these scandals developed over and nothing was done by his organisation.

Mr Medcraft states "...."fired up" over the "absolutely appalling" fact that Australians can't trust their financial advisers."

I can also say fired up" over the "absolutely appalling" fact that Australians can't trust their investment bankers."

I could put a question mark over your appoinment without advertising the role first.

As for the idea to "lobby the government to set up a national exam for financial advisers," I did 10 years of "exams" plus countless of extra study in my 41 years as a financial adviser and am still learning.

And a man in your postion should not put the bad apples with the good. There are bad investment bankers as there are bad doctors, politicians, bus drivers etc, so get your facts right before you open your mouth.

Perhaps it's time the regulator sat an exam!

He should be furious about the appalling job that ASIC does as regulator, not denigrating financial planners.

After these comments I suspect when Mr Medcraft retires you will find it hard to find a Financial Adviser to look after you.

It is really sad that Mr Medcraft has painted all advisers in the same light. I recently exited my business and I was humbled by the reaction from my clients. It left me emotionally drained and made me wonder whether I did the right thing however the adviser that took over my clients has left me totally confident that they will be looked after.

@Surendra Pather - please do not hold the medical model as a template for the advice industry. That model is designed to empty our pockets like no other. Any alternative treatments that do not fit that model are crushed and only that which suits big pharma sees the light of day.

ASIC has for a long time been critical and cynical of the financial advising profession. What Medcraft and ASIC are doing are examples of 'playing the man rather than the ball" Why - because ASIC's record is pathetic and the senior management are desperately trying to hold onto their jobs in the face of apparent incompetency. Watch this space as ASIC tries to publicly maul the profession at every chance it has: see Medcraft's speech and the recent speech by Louise Macaulay expressing their disdain for the industry. Tip to the industry - fight back, next speech you make refer the audience to ASIC's performance and the lapdog it has become.

Eloquently said John Hewison. Totally endorse your comments

Hey Greg Medcraft. Resign, resign, resign. Time to go back and join your investment banker mates.
Time to sneak off quielty Greg. Disgusted.