In the midst of the Federal Election campaign, we are asking advisers to consider which party they believe will better serve the diverse interests of the financial services industry if they win Government.
Our poll question is:
Following the August 21 Federal Election, which Government will deliver a better financial services industry for advisers and consumers?
The answer to this question may be simple for some, but difficult for others. For example, would a new Coalition Government be better for advisers and the industry itself, but leave consumers less protected? Would a returned Labor Government serve the interests of consumers, but at the expense of a less competitive financial services sector?
Successive Federal governments have agitated for serioius financial services reform. For the many who have spent some time in the industry, they may recall the substantial changes made by the previous Coalition Government: the Financial System (Wallis) Inquiry, leading to CLERP 6 recommendations, leading to the Financial Services Reform Act, leading to unintended consequences, leading to the FSR Reform Amendment Act.
The present Government has instituted three key inquiries in its first term: Ripoll, Henry and Cooper, where many recommendations from all three will inevitably be legislated if the Government is returned. But which recommendations? What will be the impact and/or consequences?
Is it possible that one Government can enact policies that will see a better outcome for all elements of the financial services community, including industry funds, retail funds, life companies, advisers, licensees and of course, consumers?
Or is it impossible, almost by definition, that one Government can structure a financial services industry that will be to the benefit of all these sometimes conflicting elements?
To what extent will advisers be swayed by one of the key policy differences between Government and Opposition, namely that a Labor Government will legislate to control, to an extent, how an adviser is remunerated, but a Coalition Government has said it will not?
We are not asking how you will vote on August 21. Your answer to this poll question may indeed reflect how you will vote, but there may be other considerations that will lead you to cast your vote a different way.
Tell us what you think. As always, we will appreciate and value all (measured) comments you may wish to add…
One of the sad characteristics of modern Government is that they are so confined by their idealologies that they are incapable of thinking through a policy position to avoid un-intended consequences.
When I was a public servant that was one of our roles-to remind Government of possible problems in a new policy proposal, but ultimately facilitate the change once the decision was taken. It was called ” frank & fearless advice “, but its been replaced by fear and loathing.
Very sad.
Costello commisioned Wallace, then FSR, and created APRA & ASIC. Then he took his eye off the ball !
The result was a disaster-the lawyers and ASIC ( or are they the same ) got their hands on compliance and scared dealers witless- hence 30 page risk SOAs, and SOAs of biblical proportion for a couple of funds.
APRA could not see what HIH was doing, even though they moved to Sydney
Apparently no one in Treasury saw the potential for self-indulgence by ASIC and the ever increasing cost of compliance. If they did, they were too muted to yell.
Yet direct insurers and television product floggers can sell products on a general advice basis that we would never recommend, with tiny SOAs and a ” no-care ” attitude. A scottish comedian gets on TV, restrains his previous profanities, and flogs a cheap and nasty income protection policy from one of our insurance ” friends ” to un-educated consumers. The particular policy comes with a 2 year benefit period and NO PARTIAL DISABILITY and a 2 year Pre-existing condition rule. The product is so awful its useless, but no one in government thinks its important that the consumers ought to be made aware of the problems.
If enough people attempt to claim on such products, the government will need to re-resource FOS and CentreLink – taxpayers money.
Victims of this rubbish need advice-but it must be paid for – I don’t run a charity !
Oh, and buy the way-this system is the product of the ” small business friendly’ Howard government. All Bowen has done so far is to threaten the traditional method of paying for that advice.
Abbot & Hockey say the client shall make the decision to pay a fee for life risk advice or permit the adviser to be paid commision. I have read the detail, and I must say there is enough ” wriggle room ” in that undertaking to make me be doubtful.
No politican is your friend- they just want your vote on 21 Aug and they will prostitute themselves to get it, and forget all promises, even the ” core ” ones, ASAP – post election
As to the decision on banning life risk commissions, here is my view. The decision has already been made. The industry consultaion is a farce. Treasury are experts at listening intently to stakeholders and the ignoring them, and those well meaning industry headline-seekers trooping to Canberra for a chat are being duped.
And what of our “friends” the life offices. Only one CEO, Jim Minto of Tower, has put in a submission to Bowen stating commissions on life risk should remain.
The rest are, pardon the language, showing a distinct lack of moral fortitude-a failure to proceed.These people would not be managing companies of such wealth if not for the efforts of commission-based agents/advisers who took all the risk over the last 150 years.salaried advisers did not create that wealth.
If common sense prevails, it IS possible to structure a finacial services industry that will be to the benefit of all parties. If self-interest and idealology runs wild,and the person who predicts un-intended consequences is NOT given a hearing, then there is NO HOPE.
Finally, I think our industry should be asking Bowen is his proposed ban on life risk commissions is going to apply to EVERY PARTY who are paid a commission, or just IFA Advisers
For example, Trustees of super funds, including the not for profit funds, are, tecnically, apparently not paid
” commissions”.However insurers who tender to supply insurance products to the Trustees do pay the Trustees for ” services rendered” in getting the member to do the application,then process the application to the insurer, and handle the initial part of any member claim. If thats not transactional commission ( it could never be called “advice” ) then my name is Father Xmas.
AND-dont forget the profit share bonus. In any language, thats ANTI-CONSUMER, because it encourages the Trustees and fund administrators to move claims in to the next bonus calculation period. Sounds like commission to me !
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