The “F” word is a problem in more than just the North America. The U.S. Congress is currently trying to cobble together some type of financial regulatory reform and somehow resolve the nettlesome industry debate over the “fiduciary” status, namely, as to whether financial advisors should be allowed to wear two hats: one when providing fee-based investment advice as a fiduciary and then also acting as a Series 7 holder in commission-based transactions.

It seems our colonial counterparts, Australia and New Zealand, are also facing similar troubles. The Australian government is conducting a “super system review” to examine the financial service industry and how financial advisors are paid on the nearly $1 trillion in “superannuation” savings (basically Australian pensions.) The Sydney Morning Herald reported today that while the debate is far from over, the Australian bipartisan parliament stopped short of recommending laws to ban commissions, but the Australian Securities and Investments Commission “suggested the Government consider legislation to remove such payments from the industry,” says the Herald. Legislative changes might also call for amendments “to require financial advisors to place their clients’ interests ahead of their own.”

After the Australian report recommended putting an end to its commission-based system, in a similar way, but with a different accent, New Zealand’s investment watchdog is now also examining how advisors are paid. The Aussies and the Kiwis will likely come up with similar recommendations to what the SEC’s Rand Study found: That clients don’t really understand the the difference between an advisor’s fiduciary obligations (under the Investment Advisers Act of 1940) and the suitability standard that governs Series 7 holders’ obligations. Similarly, like the U.S., no doubt there will be dissention among the industry and regulatory ranks on what exactly constitutes acting as a “fiduciary.”

(Look for our story on the Fiduciary debate, “The Fiduciary Future” in our December issue of Registered Rep. It will go online on December 4.)

Still, the U.S. government has bigger fish to fry than an advisors’ commissions. For example, there are other worrisome events higher up on the docket, things like worrying about new losses on banks’ balance sheets. In his daily newsletter “Breakfast with Dave,” Gluskin Sheff’s chief economist David Rosenberg points out that after toxic assets, the short-term debt banks took on during the bubble times will be the next thing to rear its ugly head. Rosenberg says, citing Moody’s, that there is nearly $7 trillion of global bank debt that matures by 2012 ($10 trillion by 2015). Rosenberg says this debt is concentrated in the U.S. and the U.K, and “does not include the mountain of refinancing in the commercial real estate market coming due (where values have sunk 50%!).” He says these banks hold over “$150 billion of commercial mortgage-backed securities (CMBS) through 2012.” Not to mention, Rosenberg says, many large banks are nowhere near the new risk-adjusted capital ratios that will be established by the Basel committee early in 2010. “The potential capital raise and share dilution may catch a lot of folks off guard,” he says.