December 4, 2017
The calling of a Royal Commission into banking and financial services was likely to remove uncertainty and restore consumer confidence but should not re-examine areas covered by previous inquiries and reviews, according to industry bodies.
In a message to AFA members, AFA Chief Executive, Phil Kewin noted that while the draft terms of reference made no specific reference to financial advice or advisers, it did cover the activities of financial services entities, which included advice licensees and their authorised representatives (see: Government Calls Royal Commission into Banking and Financial Services).
“From this it is clear that financial advisers are within the scope of the Royal Commission and it is likely that there will be some focus on financial advice,” Kewin said.
Kewin added that while the AFA believed the advice sector had already been subject to numerous reforms and inquiries “…we do accept that the political and media pressure for a further inquiry was intense and that the Royal Commission will now enable the matter to be resolved and to improve consumer trust in our industry”.
“…it is clear that financial advisers are within the scope of the Royal Commission…”
FPA Chief Executive, Dante De Gori told Riskinfo it was likely that advice would be an issue raised during the Royal Commission but there should be a recognition that it has been dealt with under the Future of Financial advice reforms and the pending Life Insurance Framework and Professional Standards changes.
“We would expect the Royal Commission would not cover old ground and would instead examine areas not yet covered in the financial services sector,” De Gori said, adding the advice sector had already moved ahead and agreed to a raft of widespread changes since 2009.
“As such we would hope the Royal Commission does not hinder or change the work currently underway. If anything, we would like to see other parts of the financial services system come under the same level of scrutiny as advice and adopt the same benchmarks, making reform holistic across the sector,” De Gori said.
FSC Chief Executive, Sally Loane also told Riskinfo the FSC maintained the view that further inquiries into the sector were unwarranted after it has already been through 18 reviews and inquiries since 2007.
“However, it is now in the national interest for the political uncertainty to end. It is hurting confidence in our financial services system…and has diminished trust and respect for our sector and people. It also risks undermining the critical perception that our financial services sector is well regulated and our clients and customers funds or protection cover is safe and secure,” Loane said.
Loane added that the FSC noted the draft terms of references did not require the Royal Commission to review the same areas as existing inquiries, including the Parliamentary Joint Committee inquiry into life insurance.
“We urge the Parliament to remain focused and not let the Royal Commission stand in the way of passing important reforms which will have demonstrable pro-consumer outcomes,” Loane said.