Argyle Lawyers and Victoria University have told a parliamentary inquiry that gaps in ethical leadership contributed to systematic failures and consumer losses with financial planning group collapses.
In a joint submission last month, the two organisations said that individual accountability should be emphasised for those giving out financial advice and recommended the inclusion of specific training in professional ethics.
Research by Victoria University found that Australian Financial Services (AFS) licensees may not be implementing systems and procedures within their organisations to promote ethical culture and integrate governance, risk management, compliance and ethics frameworks.
"We recommend that AFS licensee induction programs be enhanced to include instruction in the governance and ethical culture systems of the organisation, so as to reduce the risk that decision-making will be unaligned to the values of the organisation," the submission said.
"We also suggest that such training be linked to the reporting, disciplinary and performance management systems within the organisation, so as to ensure that important messages about acceptable and unacceptable behaviour are reinforced."
The provision of template advice and other disclosure documents which were not tailored to a client's specific circumstances were also at fault, the submission claimed.
"This 'one size fits all' approach to the sale of financial products or strategies across client databases and inappropriate attempts to convert personal advice to general advice so as to limit liability and process is, in our view, inconsistent with the current legal requirement to give personal advice which is suitable and tailored to each client and leads to greater risk for consumers," it said.
There have been a number of reent collapses involving financial planning groups recently, including Storm Financial, Westpoint, Timbercorp and Great Southern.
The parliamentary committee is scheduled to report to Parliament by 23 November.