Adviser Ratings has announced it will launch a new ‘quality of advice’ rating system for financial advice licensees.
In a release announcing its initiative, the research and rating firm says the need for these ratings “…has been reinforced by the findings of the Royal Commission that identified material failures of governance in licensee management and recommended greater availability of information to help consumers make informed decisions.”
…manufacturers will have a greater shared responsibility with the advice channel to ensure consumers are served in their best interests
Adviser Ratings says its licensee rating system will be launched later this year and is intended to “…provide useful signals to consumers, advisers, industry and regulators in differentiating over 2,200 licensee businesses comprising 27,000 financial advisers.
It says the ratings will also provide what it believes to be much needed intelligence for the product manufacturers under the Design and Distribution Obligations and Product Intervention Powers Bill currently before Parliament: “It follows that manufacturers will have a greater shared responsibility with the advice channel to ensure consumers are served in their best interests,” says the rating house.
The announcement of the new system was accompanied by the announcement of an external ratings committee “…to ensure the rating system is managed according to a reputable governance regime.” The ERC is to be chaired by Jerry Parwada, Professor of Finance and former Head of Banking and Finance at UNSW Business School, and its members will include well-known former Deputy ASIC Chair, Peter Kell.
Adviser Ratings founder and MD, Angus Woods, noted “The Royal Commission has made it abundantly clear that the operation and supervision of the financial advice licensee ecosystem lacks transparency, and financial incentives embedded in the system have influenced behaviours not in consumers’ best interests…This is a watershed moment for substantive industry reform.”
Adviser Ratings also announced that its external ratings committee would be supported by an inaugural expert panel that includes former FPA and FASEA senior exec, Dr Deen Sanders and Encore Advisory Group chief, Tom Reddacliff.