The Court of Public Opinion
By Bruce McLachlan, Chief Executive
07 May, 2018
Australia’s Royal Commission on Financial Services is going to have a material long term impact on financial services on both sides of the Tasman, but not likely for the reasons currently getting publicity. Yes, there have been examples of very poor behaviour exposed in the Australian industry over an extended period of time. These examples will be dealt with swiftly and severely by authorities and there will be personnel changes at some organisations at all levels as a result. This process has already started. New personnel will come in and there will be major rectification programs relating to both culture and process implemented at many if not all institutions. In two years or so this will be the new normal.
The impacts from the Commission will go far deeper however. What has now changed forever is the trust of the public. The power and expectation of public opinion is something every institution invests heavily to gain, but once lost is very difficult to rebuild. Notwithstanding the examples of bad behaviour, what has been exposed more than anything else is that meeting the letter of the law with regards financial regulation is nowhere near good enough. The ultimate judge of appropriate corporate behaviour is public opinion and their expectations have been well ahead of the bar that lawmakers and regulators have set. Many Australian Financial Services companies may not have broken any laws, but that is not the criteria by which many will now be judged.
This is why the impacts will be more far reaching and longer term that many may be expecting. It is also the reason why the impacts will be felt heavily in New Zealand. Regulators may have difficulty identifying similar examples of bad behaviour here, but that ignores that public opinion has moved. Meeting the minimum legal standards is a given. Meeting client’s expectations with regards independence, quality of advice, fairness, transparency and value for money is way more challenging.
Our challenge is that while we don’t charge a fee for advice, we do only sell Fisher Funds products and we only provide advice on Fisher Funds products. That does not seem unreasonable as a specialist New Zealand based fund manager. In fact, it means we are accountable in every respect for the outcomes our clients receive. Our processes are very transparent and client friendly. Public opinions of these matters though are changing and we will have to ensure Fisher Funds stays ahead of your expectations.
To finish, last month I advised you all of our intention to launch a new mobile friendly online service. The first iteration of this service was made available to clients at the very end of April, with mostly very favourable feedback. As always with new services there will be ongoing improvements required and some gaps to fill. Please give it a try and let us know your thoughts.