The prospect of coming under the glare of the royal commission appears to be sending a shudder through the advisory sector, particularly among the major financial houses.

Research from Bell Potter reported by Independent Financial Advisors, a trade press publication, found that AMP, ANZ, Commonwealth Bank, IOOF, NAB and Westpac had lost a cumulative total of 87 advisers during February.

For the year to February, Bell Potter found that the big five finance houses lost a total of 804 for the last year, Bell Potter analyst financial services Lafitani Sotiriou said in an email to subscribers.

“AMP was particularly bad, notching its second worst month in the last year at -46 in February, which given the company is spending ~$80 million a year buying advisers and advisers’ books, is mind-boggling,” Mr Sotiriou wrote.

“These losses are a concern, given AMP is looking to sell its life company, where part of the attraction is its large distribution (which is declining at a rapid rate).”

While the major houses are losing advisers, there appears to be a move to smaller companies with Mr Sotiriou saying there had been a slight increase in overall adviser numbers over the year as smaller companies boost their numbers.

“The move away from the large integrated institutional players continues, and we believe the current royal commission will only accelerate the move faster as we expect to hear stories that are likely to damage the aligned brands further,” he said.

Dante De Gori, CEO of the Financial Planning Association of Australia, said: “The royal commission has a massive remit to get through in a short period of time. The financial planning sector has had heavy regulatory reform over the last 10 years.

“It’s appropriate now to ask, six years after the introduction of FOFA (the Future of Financial Advice) reforms ‘has it made a difference to outcomes and behaviour?'”

‘Advisers account for 80 per cent of misconduct’

A recent submission from the Financial Ombudsman Service (FOS), a complaints forum for consumers, identified investments and advice as making up 80.7 per cent of serious misconduct issues since 2012.

When this figure was broken down, FOS found “financial advisers/planners account for more than one-third (39 per cent) of serious misconduct issues we have identified since early 2012”.

There appears to be difficulties for the FOS in enforcing its determinations in financial matters after members of the public make complaints.

“The level of unpaid determinations at the end of December 2017 was almost one-quarter (24 per cent) of all determinations made in our investments and advice jurisdiction,” the submission said.

Advisers were highly represented among those not paying up on FOS’ determinations. “Financial advisers/planners were involved in more than half (55 per cent) of all of these unpaid determinations, followed by operators of managed investments schemes (13 per cent) and credit providers (10 per cent).”

Mostly these determinations were unpaid because the companies employing the advisors had “gone into liquidation or administration”, FOS said in its submission.

These unpaid determinations “have resulted in excess of $14 million dollars not returned to affected consumers. These have had and continue to have significant impacts on people’s lives”, FOS submitted.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will begin hearings in Melbourne on March 13.