While Synchron Director Don Trapnell says his company supports any moves to reduce the cost of advice and relieve the compliance burden, as outlined in an FSC White Paper on Financial Advice, he says advisers are questioning why they should trust the FSC.
A statement from Trapnell, responding to the launch of the FSC’s White Paper, says the company would “…obviously support moves by any industry body, association, or group of advisers that would reduce the cost of advice for consumers, relieve the compliance burden on financial advisers and simplify the industry’s regulatory framework.”
Trapnell says many of the FSC’s recommendations made sense – including calls to abolish the Safe Harbour steps of the Best Interests Duty; to trade Statements of Advice for consumer-focused ‘Letters of Advice’; to break the nexus between financial product and advice; and to afford greater recognition of prior learning (see: Landmark White Paper Blueprint…).
However, he says, “…and this is perhaps more of a problem than the FSC is willing to recognise, the question on the lips of many risk advisers is – why should we trust the FSC?”
Trapnell says risk advisers have neither forgiven nor forgotten the Life Insurance Framework, which he says dramatically and negatively impacted their businesses, and holds the FSC largely responsible for it:
…We still believe LIF was predicated on a lie, a lie that a culture of churn existed amongst advisers…
“We still believe LIF was predicated on a lie, a lie that a culture of churn existed amongst advisers when there was scant evidence of it,” he says.
He continues: “It was championed by the FSC whose members, to this day, are primarily fund managers, superannuation funds and life insurers. Advisers are right to question the FSC’s motives.”
Trapnell also expressed disappointment that the White Paper did not recognise the need to separate risk advisers from financial planners, especially in relation to education and training.
He noted that specialist risk advisers provide different services to financial planners. “It doesn’t make sense for them to hold the same qualifications or have to commit to the same educational program.”
Trapnell added that the Shadow Minister for Financial Services and Superannuation, Stephen Jones, MP had recently recognised this point.
Synchron says that when speaking at the AFA’s Evolve Conference last month, Jones said FASEA should have recognised that not all advisers need to know every part of the qualification.