ASIC has claimed issues within Australia's financial planning sector stem from participants or "bad apples" operating at a minimum or below the minimum level.
"Our system in Australia is a very free market system that relies on gatekeepers, of which I think planners are gatekeepers, and relies on those gatekeepers to do the right thing without really pushing too much on regulation," ASIC commissioner Greg Medcraft told delegates from a panel session at last week's FPA national conference on the Gold Coast.
"I think in this profession we've had many people who have been operating probably at the minimum or below the minimum and that's the problem."
Medcraft said it is up to Australian financial services licensees and fellow planners to stand up and put a stop to "bad apple" planners.
"If you have bad apples in your industry it's incumbent on you if you know a bad apple to do something about it and not be passive," he said.
"A bad planner might have around 150 clients so that's going to potentially destroy 150 lives ... I think what this industry really needs to focus on is getting rid of the bad apples."
In response to Medcraft's comments, fellow panellist and Sentinel Wealth management managing director Justin Hooper said it is up to the regulator to offer a solution.
"In my view the only way to solve it is the regulator has to actually regulate the industry and the profession," Hooper said.
He said the regulator has to set the different levels of standards as the industry has a vested interest and the industry is not going to shift this view.
"The concern for the FPA and therefore all of us is there are other bodies that are going to come up with the chartered financial strategist that is nowhere near the same qualification as the CFP [certified financial planner], and the consumer is going to get confused. Therefore, the regulator is the only one that is going to deal with it," Hooper said.
Medcraft said ASIC intends to work with Financial Services Minister Bill Shorten on the concerns of adviser definitions and competency, as part of the government's new advisory panel that he will chair.
FPA chief executive Mark Rantall suggested the Labor government's advice panel adopt the FPA's code and move on, which Medcraft said he would leave up to the 16 panel members to discuss.
