Two Out of Three Ain't Good

Corinna Dieters, the chairman of the Financial Planning Association, learnt a hard lesson yesterday: You can't "spin" your way past all the people, all the time '” especially if they've just been briefed an hour earlier by the industry's top regulator.

Dieters may well have gone to work this morning regretting her decision to hold a press conference yesterday in an attempt to respond to ASIC's hard-hitting "shadow shopping" report.

The report clinically and comprehensively indicts the financial planning sector as woefully inadequate for Australian investors.
Dieters kicked off her address to the media with a hearty message that she wanted everyone to "focus on the positives" inside the report. But her timing was wrong. Earlier in the day, ASIC chief executive Jeff Lucy had carefully led reporters through his report's black spots.

By the time the same reporters had filed across Sydney CBD to hear Dieters at the FPA, they were baying for blood. Strangely, Dieters chose to remain in Melbourne, appearing on a video screen while her unfortunate offsiders had to sit face to face with an advance guard of the nation's finance press.

Veteran Sydney Morning Herald columnist John Collett '” who had clearly read the ASIC report cover to cover '” could hardly wait to tackle the FPA. As Dieters tried to argue that having nearly one in three advisers giving bad advice on superannuation switching was acceptable, Collett cut to the heart of the matter: "Are you telling us then, that when it comes to good advice that two out of three ain't bad? Is that what you're saying?" he asked.

And Dieters walked straight into a negative headline: "Yes, you can say that," she replied to groans of disapproval around the board table.

Corinna Dieters

Worse was to come. When it was pointed out that 46% of planners were not following the law and providing written statements of advice, Dieters bravely asserted that there was a "deficiency" in the legal system.

Eureka Report asked Dieters what the FPA was going to do about the alarming situation where bad advice was six times more likely when planners had a conflict of interest. "I'm not sure you can draw a direct comparison on this," she answered, hesitantly. At this point the FPA policy manager John Anning gamely interjected to suggest: "You can't draw a line between conflict of interest and advice lacking a reasonable basis."

Before anyone could holler "Oh, Yes You Can!" Dieters was suddenly under siege with a barrage of fresh questions '” Why don't you kick rogue planners out like they kick bad lawyers out of the Law Institute? Why does the FPA allows the commissions system to flourish? Why is the FPA's regulation so toothless?

But it was too late. By this stage, the FPA was grimly determined to bat on in fading light with nobody any longer expecting anything like a credible answer. This morning's press coverage omits the bulk of the FPA's comments yesterday because most reporters sensibly ignore cliches and platitudes. But there's a deeper issue left unresolved: Until the FPA at least begins to accept the criticism of its own industry regulator, many investors will have to fend for themselves.