1 Comment 1 Commentby Susan Edmunds
The paper was released yesterday and sets out three proposed goals for financial advice regulation: To give consumers the information they need to find and choose a financial adviser, to make advice accessible and to give the public confidence in the professionalism of advisers.
The 66-page paper asks a range of questions including about commission, qualification requirements, adviser designations, personalised versus class advice, disclosure, professional bodies and the cost of compliance.
IFA chief executive Fred Dodds said his organisation would engage with the Ministry of Business, Innovation and Employment about the issues paper.
It is running a survey of its members and the review would be discussed at the upcoming conference and the IFA's monthly branch meetings.
“One of the complexities is around people understanding what does an adviser do? In Australia, ASIC’s register includes the name of the adviser, what’s their specialisation, what’s their history, how long have they been in the game and what are their qualifications, what professional bodies they belong to. That’s something that could come out [of the review].”
He said it was good that the review was asking questions about adviser designations. “There’s enough talk about RFAs, AFAs, QFEs, Joe Public needs to be able to go somewhere to find that out. They’ve also talked about the burden of compliance costs and that will have feedback from us.”
The paper asks how effective professional bodies have been at fostering professionalism and whether they should play a formal role in the regulation of financial advisers.
But Dodds said it was too early to comment on those questions. “It’s more important to look at what is the purpose of the act, to promote confidence and integrity, and has that worked? That’s the starting point.”
Compliance specialist Barry Read said the issues paper asked a number of good questions.
He said the questions about the cost of compliance were particularly pertinent. "Everyone is asking that. The other good question is whether there should be differentiation between financial advice and selling financial products. I think that's a really key question the industry needs to consider because a lot of the time the consumer just wants someone to sell them a product. They don't necessarily want a 50-page report to buy a financial product. But at the moment everyone is scared and think they are culpable for every piece of advice and recommendation they give."
Read said he was excited by the review. "I'm looking forward to it."
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Passionate industry people with a few minutes here and there to engage with the wider industry and share their views.
Maybe an article of this from GR would assist with some balance to the arguments that the bigger businesses with deep pockets and ability to lobby have, when pitched against the single and small practitioners who are quite frankly just getting on with helping people and making a living.
It would make a difference to the usual suspects of industry associations and providers who are often a bit close to the difficult points that need to be raised and presented.