IFA explains 'name and shame' approach
The Institute of Financial Advisers has responded to a minor flurry of resignations in the days since it named and shamed two renegade financial advisers.
IFA president Lyn McMorran has written to members reassuring them that the organisation doesn’t take investment losses into account when considering complaints.
Ms McMorran says her newsletter was written to give members some context for the decision to name advisers.
Fewer than 10 IFA members have resigned over the past week and she says the association will be discussing their reasons for leaving with those members.
On the whole, she says the institute has had more congratulations than criticism for deciding to name members Craig Lunn and Bruce Ryder as part of their penalties for breaching IFA standards.
“A lot of them are really tired of being tarred with the brush that all financial advisers are bad.”
As she outlined in the newsletter, just 16 complaints have been upheld from 92 received in the past three financial years. The IFA has more than 1300 members.
In the newsletter, Ms McMorran tells advisers that if they follow the right procedures, such as matching recommendations to their clients’ risk profiles, they should not worry about getting a similar punishment.
She points out that the cases concerned were serious ones. “There was also a certain lack of wanting to take responsibility for it.”
Although IFA members cannot resign their membership once a complaint is laid about them, the two members tried to get around this by not paying their subscriptions and arguing that “non-financial” status excluded them from the IFA’s jurisdiction.
The IFA’s disciplinary committee rejected this argument.
The advisers were ordered to pay backdated IFA subscription fees as part of the decisions – for Mr Lunn, this amounted to more than $600.