PAA offers FSC support

Mud-slinging between different factions of the financial services industry is damaging and could harm its reputation, the chairman of the Professional Advisers Association says.

Thursday, November 19th 2015, 6:00AM

by Susan Edmunds

It has been suggested the PAA could be look to take on some of the life insurance representation functions of the Financial Services Council if that organisation were to disband.

PAA chairman Bruce Cortesi said it had no announcement or changes to reveal at present.

But he said the ructions occurring within the FSC were not serving the industry well.

Insurers AIA and Partners Life have both tendered their resignations from the FSC in protest over the report it commissioned from actuaries Melville Jessup Weaver, which is understood to recommend large-scale commission reduction.

Both AIA and Partners Life pay significant upfront commission to independent financial advisers.

Cortesi said signs of industry disagreement did not send the right message about the industry to the Commerce Minister or the regulators, particularly as the Financial Advisers Act is under way.

“This is the last thing we want to see. It’s unfortunate,” he said. “There are an awful lot of people in the industry mudslinging and we’ve got to step back and think is this the message we want to get out there? The Minister is giving us a chance to resolve the issues of the industry ourselves and at the moment I don’t even know that we are capable of doing that. But if we could then the possibilities are huge for the industry.”

He said he questioned the number of appointments of third parties in a range of parts of the industry, who had been tasked with identifying its problems and come up with a solution. “Who is the expert on the industry? We are. It seems odd to spend money asking other people to tell us what the problem is. We know what it is, let’s get on with it.”

Cortesi said he had his own “radical” ideas to revamp adviser remuneration and allow them to charge clients a fee. He said he could not disclose those plans yet but was talking to product providers and would discuss them with the IFA.

In the meantime, he said the PAA was offering its support to the FSC.

“We are not in the space where want to make any announcement or any changes. Our role doesn’t change.”

Tags: FSC PAA