Support for the Government’s response to the final report of the Financial System Inquiry (FSI) has been strong but has reflected sectional interests within the financial services sector, with one group praising the use of three-year claw back periods.
The Association of Financial Advisers (AFA) stated that it was “broadly supportive” of the Government response but was still engaged with it on the issue of the Life Insurance Framework (LIF), which was adopted as part of the FSI response.
AFA chief executive Brad Fox said, “we remain in discussions on the detail and implementation of the LIF.”
“Ensuring fairness and balance is important for all parties: consumers, insurers, and financial advisers – especially those who own and advise in small businesses.”
However, the Financial Services Council (FSC) welcomed the adoption of LIF under the FSI response, including the proposed three year claw back arrangements, hailing them as a good consumer outcome.
FSC chief executive Sally Loane said the group was pleased the Government had continued its reform of the advised life insurance sector and that it would move ahead with the LIF proposals released on 25 June.
“When implemented, this package of reforms, which includes reduced commissions, extension of clawbacks to three years and the introduction of an industry-wide reporting regime, will substantially benefit consumers,” Loane said, adding the FSC’s own life insurance Code of Practice, which is yet to be released, would provide further consumer protections.
“We also welcome the government’s commitment to introduce a rationalisation mechanism for legacy life insurance products. It is a timely reform that will help reduce barriers for consumers accessing contemporary products and will reduce industry costs.”
On the issue of improving the professional and education standards of financial advisers the FSC was more in tune with the AFA and the Financial Planning Association (FPA), stating it supported the “adoption of a high benchmark for the financial advice sector”.
“The bar has now been set for the financial advice sector to evolve into a profession. High quality outcomes for consumers must be the focus for advice and for maintaining consumer confidence in the financial advice industry,” Loane said.
Fox said AFA members supported the adoption of Code of Ethics as well as the raising of educational and professional standards, but described the detail of transitional arrangement for existing advisers as a critical issue.
FPA chief executive Mark Rantall said the Government’s response was in line with the associations own 10 Point Plan to improve professional standards but would also protect the term ‘financial planner/adviser’.
The Commonwealth Bank, NAB and BT Financial Group also welcomed the Government’s response with each of them pointing to their existing support of higher education and professional standard for advisers as recommended in the FSI report. NAB and BTFG also highlighted that they had supported the introduction of a registration exam for advisers in their FSI submissions.
In 1937, US policymakers destroyed their Great Depression recovery, by tightening fiscal and monetary policy. The US President, Roosevelt, made a fundamental mistake
that threw another 4 million people out of work and it was such a disaster, his
Government had to retract their ridiculous ideology within a year.
What we are facing today is a similar scenario, where people in positions of power,
with little knowledge, are pushing their short term agenda’s, with no regard to the big picture implications.
Sally Loane is the main culprit and her representation of the FSC position, highlights a lack of understanding, or worse, a complete disregard for the proper and decent way to look at and solve issues.
The AFA and FPA seem incapable of bringing to light, the disgraceful way the FSC has
manipulated the retail Life Insurance Agenda.
There is a plethora of information and facts that will easily destroy the FSC arguments,
yet we are still waiting for a constructive and confrontational response from the AFA or FPA.
It may be time for the members to demand a better response, or force the directors to
stand aside and vote in people that have a greater understanding of how Government and Big Business think and act.
Then the proper responses and recommendations can be put forward that truly represent a better outcome for all parties.
I have read this three times ??am I missing a bit ? where is the name of the GROUP praising the 3 year clawback. Must be a bank or insurance company ?? does anyone know ??
sorry just found it the FSC !! OF COURSE ?
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