Higher cultural standards that expose wrong doers in the investment industry and makes their recruitment less likely, are urgently needed says Kate Misic, the new president of the CFA Society of Melbourne.

Misic, who is also head of alternatives investments at Telstra Super, wants fund managers and institutional investors to endorse the CFA’s Statement of Investor Rights, which covers areas such as honesty, fairness, fees, communication, records and conflicts of interest.

She also wants them to endorse a separate Asset Manager Code of Professional Conduct, which sets professional standards for fund managers. This latter code has been signed by 1100 fund managers worldwide, but so far only four of these are Australian firms. Misic believes all firms in the industry should be able to endorse the standards set by the code.

Scandals around the finance industry in Australia have meant much of the CFA Society initiatives over the last few years have been around repairing trust and reputation.

“The reality is that the good guys in our industry outnumber the bad guys quite significantly,” said Misic, “but if we do not work proactively to expel them from our industry they will continue to give us a bad name.”

She urged employers to set high and strict ethical standards that should be used in filtering candidates in the hiring process.

Noting financial institutions that have recently hit the headlines for being forced to pay out compensation for poor advice, she said: “We have not been as strong and strict as we could have been in the past. The potential profit gain from turning a blind eye to bad practices is ultimately going to lead to a loss.”

Misic also wants a culture of continuing education for investment professionals similar to that found in law and medicine.

She notes the standards of education imposed upon financial planners and that other parts of the industry should take the initiative on education or else risk the regulator intervening.

Misic also fears standards imposed through regulation may depart from what is being required globally. Her concern is that any Australia specific rules could run into difficulty with international fund managers that follow different rules.

“Too often we are unable to influence global managers on this,” said Misic. “Harmonised regulation will make progress easier.”

Worldwide, the CFA Institute has declared May as “Putting Investors First Month”.