I had the pleasure of being the CPA Australia representative at the Global Integrity Summit held at South Bank, Brisbane this week, hosted by Griffith University.
Being a CPA means that the cornerstone of our brand is upholding integrity in terms of how we deal with the public, our clients and with each other.
One of the observations that was very clear from the Summit was that the root cause of the Global Financial Crisis (GFC) was a collapse in ethical behaviour across all areas of the financial services industries in various countries. The Greycort White Paper highlighted this fact and concluded that most financial service providers including financial planners, banking executives, and stock brokers operated out of greed and in their own self-interest rather than in the interests of their clients. They had what is called "integrity failure"
Greed and self-interest is inherent in the financial services industry and it is a disease that will never be fully eradicated. We are also creatures of habit and have short memories, greed and self-interest will once again create future GFC’s.
If you believe I am wrong, then consider the following examples of greed and self-interest that has been in the recent news:
26th June 2014 - Commonwealth Bank has contacted all customers of its Financial Planning Division, as far back as those customers who received advice from 2002 onwards, advising them of misconduct and poor quality advice given to them from CBA Financial Planners who acted in their own self-interest. This could result in millions of dollars being repaid back to investors and their families who have lost money because of shonky advice. These financial planners were simply selling the best financial products so they could maximise their own commissions and feathering their own nest rather than building the wealth of their clients.
15th August 2014 - Macquarie Private Wealth was ordered by ASIC to contact nearly 160,000 of its financial planning customers to advise them that their financial advisors over the past five years have also acted in their own self-interest rather than in the interests of their customers. Their have been claims of shoddy advice just to maximise commissions and bonuses.
It seems incredible. Who can you trust with your wealth and retirement savings when the entire industry is flawed by individuals whose greed and self-interest blinds their integrity and honesty? Does all this sound familiar? Cast your mind back to the investment advisors and bankers who packaged up toxic mortgage debt and sold them as sound investment products to the unsuspecting public.
History repeats itself and we have not seen the last GFC, not by a long-shot!