The year that was 2014


By Julie May

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Whether you’re on the edge of your seat waiting to hear what will happen next or sick of hearing about inquiries, government recommendations and industry reforms, there’s no denying the Future of Financial Advice (FOFA) and Financial System Inquiry (FSI) dominated the financial pages in 2014.

With FOFA amendments blocked by the Senate in November after surviving two unsuccessful disallowance motions post their introduction in July, it would be an understatement to say planners were over the to-and-froing and the impact the ambiguity was having on their businesses.

Common sense did prevail to a degree when both sides of parliament agreed that grandfathering provisions needed to stay, enabling advisers to move between licensees without having to terminate existing remuneration arrangements on products provided to clients before FOFA was introduced.

The FSI threw down the gauntlet with a host of recommendations to government in its final report released on 7 December. These included greater obligations on product manufacturers and distributors, granting ASIC new product powers, establishing a new body to oversee the regulators, and conducting a review of the success of MySuper in 2020.

ASIC’s damning review into retail life insurance advice also led to industry executives forming a working group, led by John Trowbridge. Its interim report released this week highlighted high upfront and nil commissions were both inappropriate, with nothing in between being ruled out.

Meanwhile, Commonwealth Financial Planning and Macquarie Equities, which entered enforceable undertakings with the corporate watchdog in 2011 and 2013 respectively, continued to make headlines, with affected advice clients still going through the hoops to seek compensation.

A source close to financialobserver also indicated last week we might see ASIC move on the wealth operations of another major bank in 2015.

On the back of high profile enforceable undertakings and investors still infuriated by the action or lack thereof following the notorious collapses of Storm Financial, Timbercorp, Great Southern and Trio Capital, the industry has moved to raise education standards, with ASIC advocating that a national adviser exam be introduced.

Many hope the establishment of a national adviser register, which has been earmarked for March 2015, will also play a role in improving professionalism, education and trust in financial advice.

Other events that got tongues wagging this year included van Eyk going into voluntary administration, with its iRate technology subsequently acquired by Lonsec Research.

AMP also caused a commotion when it announced in November it would wind up its aligned dealer group Genesys Wealth Advisers, encouraging planners to move to another AMP-owned licensee.

Meanwhile, several industry heavyweights caught people’s attention when they re-emerged in different capacities.

Steve Tucker and Paul Heath, the former chief executives of NAB-owned businesses MLC and JBWere respectively, formed independent wealth management firm Koda Capital, while former ANZ global advice and distribution managing director Paul Barrett launched wealth management business Next Generation Advisory.

We also saw a lot happening in the mergers and acquisitions space.

Shadforth was taken over by IOOF, Crowe Horwath and Centric Wealth were acquired by Findex, and ClearView purchased Matrix. In addition, Infocus Wealth Management merged with Patron Financial Advice, Hub24 acquired dealer group Paragem, while OneVue made three acquisitions, its most recent being Select Asset Management.

Talks between Australian Unity Personal Financial Services and dealer group Premium Wealth Management continue.

On the product front, the mFund Settlement Service was launched by the Australian Securities Exchange in May, while managed accounts continued to gain momentum.

Financial Services Council (FSC) chief executive John Brogden also said his goodbyes after five and a half years in the hot seat, with Sally Loane named his successor.

The year has provided financialobserver with plenty to write about and we would like to thank you, our readers, and those we have interviewed, for your support throughout 2014.

Having joined the team as editor this year, I’d like to take the opportunity to wish you a safe and enjoyable festive season as would our team of journalists Krystine Lumanta, Elizabeth Somerville and Kristen Crawford.

We will return with our first newsletter for the new year on 12 January.

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