Chairman Michael Webb says there is support for change to the regulatory environment intermediaries operate in.
However, the need for change isn’t imperative. “We do not believe this is an industry in crisis.”
Webb says that if the issues facing the industry are properly addressed then there is the likelihood more consumers will use advisers and their products.
While the options paper doesn’t make too many recommendations, one comment which is bound to get support in the financial planning industry is that the scope of who is an adviser should be extended to cover those giving advice on property investments. (It also captures mortgage brokers too).
As expected the task force has picked up on three areas that potentially need reforming.
These are: the need to provide better information to consumers, enhanced redress and enforcement mechanisms along with effective sanctions and enhanced ethical standards.
It suggests there are four different options that can be used to achieve reform. The difference between each option is a gradual acceleration in the degree of regulation.
The first option is “general legal standards, with mandatory ethical, conduct and compensation standards set out in industry-specific legislation, and what the options paper calls “minimum disclosure.”
The second option, which would sit on top of the first, includes compulsory registration for all intermediaries with a governing body.
The third option would include restriction of the use of certain occupational titles (such as “financial adviser”) unless the user meets certain standards and is registered.
Option four is full licensing, with entry to the profession limited to those who meet minimum standards. This would also include on-going competency and conduct requirements.
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