The focus of both key political speeches at the FPA 2009 National Conference was on adviser remuneration and the provision of quality financial advice to consumers.
Chris Bowen
Chris Bowen MP, Minister for Financial Services, Superannuation and Corporate Law and Minister for Human Services, told this year’s FPA Conference that he holds two overriding principles that will guide the decisions he will make regarding any future regulatory changes to the financial services industry:
- Ensuring that financial advice is in the best interests of the client
- That the industry does not put the cost of financial advice outside the reach of ordinary Australians
On the topic of adviser remuneration, Mr Bowen said his issue with commission as a form of remuneration for financial advice was not simply whether a conflict of interest existed, but whether there was a perception of conflict, irrespective of whether the conflict was real or imagined.
… I hope you will agree that we need to deal with the perception of conflicts if we are to promote confidence in the financial advice sector
Mr Bowen told advisers “If you don’t agree that commissions create a conflict of interest, I hope you will agree that we need to deal with the perception of conflicts if we are to promote confidence in the financial advice sector.”
Confidence in the sector, according to Mr Bowen, will only be restored with the restoration of trust in the financial planning profession, following the high profile collapse of organisations such as Storm Financial.
Joe Hockey
Shadow Treasurer, Joe Hockey MP, sent a different message to advisers about the future of commissions under a future Coalition government.
Mr Hockey contends that legal and fiduciary obligations to consumers remove the need to significantly reform adviser remuneration structures.
For this reason, Mr Hockey said the Liberal Party platform going forward would not include banning commission as a remuneration option for financial advisers.
However, Mr Hockey stated the need to ensure that any ’secret’ commission arrangements were not part of any future remuneration for advisers.
Both Mr Bowen and Mr Hockey left advisers with the message that any future policy changes in which they may be involved will be governed in no small part by what is in the best interests of the client.
