Ripoll Inquiry Recommendations – Advisers Have Their Say

The Ripoll Inquiry recommendations  have been enthusiastically welcomed by industry representative bodies this week, but what are individual advisers saying about the future of their industry?

Our simple poll question is:

Do you support the eleven recommendations made by the Ripoll Inquiry?

We have detailed the eleven recommendations below, recommendations that the AFA has welcomed as ‘… the dawn of a new era in financial advice’, and the FPA has also welcomed as ‘… sensible and practical.’

Early adviser responses have focused on the remuneration issue (Recommendation 4) with a range of views:

“The simple solution to remuneration to advisers is easily set. All ASIC have to do is set the maximum that can be charge in any product or purchase of a product via the PDS.”

“If fees/commissions are capped at the PDS level, to say the 4%, this will stop the storm/timbercorp debacles”

“When will it be realized that the current system works…. complaints seem to be coming from those that operate outside the regular system (and products)”

“The issue isn’t so much the cost of the fees, but the advice that was given to generate the fees”

Bernie Ripoll MP, Chair of the PJC Committee Inquiry into Financial Products and Services, told riskinfo that he believes his Committee’s aims of greater clarity and simplicity for the industry have been achieved, particularly in the recommendation to make it the legislated, fiduciary responsibility of the adviser to place their clients’ interests ahead of their own.

Mr Ripoll also emphasised to riskinfo the importance of considering the eleven recommendations as one package, where the non-implementation of one or more of the recommendations may dilute the intended impact of other changes recommended.

What is your view?  Make your voice heard by voting in our poll and also adding your comments below:

The eleven Ripoll Inquiry Recommendations are:

Recommendation 1

The committee recommends that the Corporations Act be amended to explicitly include a fiduciary duty for financial advisers operating under an AFSL, requiring them to place their clients’ interests ahead of their own.

Recommendation 2

The committee recommends that the government ensure ASIC is appropriately resourced to perform effective risk-based surveillance of the advice provided by licensees and their authorised representatives. ASIC should also conduct financial advice shadow shopping exercises annually.

Recommendation 3

The committee recommends that the Corporations Act be amended to require advisers to disclose more prominently in marketing material restrictions on the advice they are able to provide consumers and any potential conflicts of interest.

Recommendation 4

The committee recommends that the government consult with and support industry in developing the most appropriate mechanism by which to cease payments from product manufacturers to financial advisers.

Recommendation 5

The committee recommends that the government consider the implications of making the cost of financial advice tax deductible for consumers as part of its response to the Treasury review into the tax system.

Recommendation 6

The committee recommends that section 920A of the Corporations Act be amended to provide extended powers for ASIC to ban individuals from the financial services industry.

Recommendation 7

The committee recommends that, as part of their licence conditions, ASIC require agribusiness MIS licensees to demonstrate they have sufficient working capital to meet current obligations.

Recommendation 8

The committee recommends that sections 913B and 915C of the Corporations Act be amended to allow ASIC to deny an application, or suspend or cancel a licence, where there is a reasonable belief that the licensee ‘may not comply’ with their obligations under the licence.

Recommendation 9

The committee recommends that ASIC immediately begin consultation with the financial services industry on the establishment of an independent, industry-based professional standards board to oversee nomenclature, and
competency and conduct standards for financial advisers.

Recommendation 10

The committee recommends that the government investigate the costs and benefits of different models of a statutory last resort compensation fund for investors.

Recommendation 11

The committee recommends that ASIC develop and deliver more effective education activities targeted to groups in the community who are likely to be seeking financial advice for the first time.