A review of financial advice as part of a Royal Commission would be a waste of money and overlooks the numerous reviews into the sector as well as major legislative changes according to the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA).
FPA Chief Executive, Dante De Gori stated that since the handing down of the Ripoll Report in 2009 there have been 54 inquiries, reviews and consultations related to financial planning which has in turn led to the introduction of five major pieces of legislation.
These include the Future of Financial Advice (FoFA), Tax Agent Services Act (TASA), the Financial Advice Register (FAR) operated by the Australian Securities and Investments Commission the pending Life Insurance Framework and Professional Standards and Education legislation.
De Gori pointed out that FoFA’s key principle was greater consumer protection and the advice sector had been working over the past five years to achieve better consumer outcomes.
He also stated that conflicted remuneration had been banned, all financial advisers were subject to best interest duties, were required to be listed on the FAR, and were to be personally registered, or supervised by, a registered individual with the Tax Practitioners Board (TPB).
“What we need to do now is focus on what has already been achieved and move forward with workable legislation that we have in place.”
“Many of these measures are less than three years old and are still in implementation phase. It is important that we allow time for the full impact of these changes to be felt,” De Gori said.
“We have come a long way in setting strong foundations for a financial planning profession that will truly serve and protect the interests of Australian consumers in the next decade and beyond. Not only would a Royal Commission put this on hold, but it would also mean that millions of tax payers’ dollars would be wasted,” said Mr De Gori.
“What we need to do now is focus on what has already been achieved and move forward with workable legislation that we have in place. Only then will we be in a position to evaluate the success of these significant measures.”
His comments are similar to those of AFA Chief Executive, Brad Fox who stated during a media briefing late last week that any funds spent on a Royal Commission would be better used enforcing the current regulations.
“The money would be better spent on providing ASIC with greater resources to police the more than adequate rules we already have in place,” Fox said.
“We have the most stringent financial advice rules in the world. We have a robust financial services system, it is not perfect, but let us spend the money making sure that we are using the rules in place. It is not the rules that are broken, it is individual cases of conduct that should be improved.”
“…let us spend the money making sure that we are using the rules in place. It is not the rules that are broken…”
Fox stated that with the numerous reviews and inquiries the financial advice sector was well aware of what the issues where and needed to address
“I think we can be pretty confident that we are all aware of where the issues lie. Let’s concentrate on what we can do to remedy them,” Fox said.
“There is considerable work going on at the moment to look at how ethics is taught and trained for financial advisers, I think we will see leadership positions develop – we are calling for it – where we see people in management and services to financial advisers needing to do the same study and be on the same understanding of ethics.”
“I think we need to concentrate on that, inherently, most people are good but they make bad choices occasionally and that is the area where driving culture can help them make better choices,” Fox added.
Isn’t it amazing how the AFA and FPA are now voicing concerns over a Royal Commission into the banks and insurers but were not so vocal in the LIF.
These organisations are too heavily funded by the banks and insurers and are working more for their interests rather than their members and customers.
If a Royal Commission does disrupt some of the reforms that are clearly only in the interests of the banks and insurers increasing profits and not the interest of customers or advisers then this is a good thing.
Dante De Gori, it appears that you are missing the point. You to state that the measures that have been introduced in the past few years need to be given time for their full impact to be felt, but it is what has been happening over the past 12 months that is of the most concern, i.e. the LIF. The other enquiries have not and will not have the devastating impact on the retail life insurance industry that the LIF will have in its current format.
You also state that “we have come a long way in setting strong foundations for a financial planning profession that will truly serve and protect the interests of Australian consumers in the next decade and beyond”, but again the LIF will undermine that. Zurich has made a submission to the LIF enquiry which has represented the interests of retail risk advisers and set out the issues quite clearly and succinctly. Their claims about the effect of the LIF have been backed up with well researched data gleaned from a number of surveys. Well done Zurich, you should be congratulated. AFA and FPA, take note of what Zurich has done. The reduction in commissions, a 2 year clawback period – these are areas that you both should be fighting against and on behalf of their members.
But because the interests of advisers have not been truly represented, we now have
the LICG. I wonder, can the LICG register as a similar association to that of the FPA and AFA? I would much rather pay fees to such a group who is actually representing the best interests of its members rather than be obligated to pay the FPA or AFA!
Very well said. Thank you
Comments are closed.