Greg Medcraft, the boss of the Australian Securities and Investments Commission, was candid when he spoke at the National Press Club last week.
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About a third of his speech was about financial advice and the need for a national exam for planners where ethics should be the core component. He said planners needed to win the confidence and trust of consumers.
After his speech, he was asked about financial advice and there was this: "Australian's want advice they can trust, it's absolutely appalling."
His emotion was palpable when he said: "It has absolutely broken my heart to watch…what financial advisers have actually done to people and what they often continue to do to people."
He said: "I do get emotional about it because I see the casualties ... and it's heartbreaking to see people who have been advised to go into products that are completely inappropriate and they have no idea what they're invested in."
Losses of billions of dollars over the past decade, including the life savings of many retirees, are finally acknowledged in a very personal way by the head of the corporate watchdog. It has been a long time coming.
Regulators operate in a political context, with a limited budget, limited powers and within the law.
But I suspect that in 10 or 20 years' time, people will look back on the financial planning scandals of the current era and the lax regulation of the sector.
They will scratch their heads and ask themselves how could the authorities have allowed it to happen.
They will not understand why poor advice had been sanctioned.
For example, ASIC has long been telling consumers to "swim between the flags".
At the minimum, swimming between the flags, means using a planner who is licensed. But swimming between the flags could mean seeing an adviser who has a minimal credential that was completed online in a matter of weeks.
Consumers have been directed to seek advice from a "qualified" adviser when the regulator knows that some of that advice, if not shonky, is far below professional standards.
It is bit like giving a safely rating to a class of cars, knowing that some of the cars have faulty brakes.
The extent of the problems in financial planning has been well known by the regulator going back more than decade ago.
The results of the ASIC's shadow shop survey of advisers released in 2003 found that 51 per cent of financial plans were borderline, poor or very poor.
Those poor results have been, more or less, confirmed by subsequent reports. Its recent report on life insurance advice found almost 40 per cent of advisers it surveyed failed to comply with the law.
The full implementation of the previous Labor government's Future of Financial Advice reforms will minimise the risk of repeats of the financial planning scandals that cost consumers their life savings.
But the vertical integration of financial services, where the banks and AMP control most of the industry, and their over-riding needs to generate sales, is not going to change. Consumers will still need to be vigilant when seeking out financial advice.
