In a statement, FPA chief executive Dante De Gori said there have been significant changes to the financial advice sector, including the removal of conflicted remuneration, that are slowly transforming the industry.
It is important to allow time for the “full impact of these changes to be felt” before turning to a royal commission, he said.
“Australia’s financial planning profession has undergone extensive inquiries and subsequent legislation over the years, which we’ve seen take place since the Ripoll Report was handed down in 2009. These have led to significant changes that solidify financial planning as a profession,” Mr De Gori said.
“Together, these changes are leading to significant improvements in consumer outcomes. Many of these measures are less than three years old and are still in implementation phase.”
Mr De Gori added that there are other key reforms on the horizon, including higher education standards, which a royal commission could disrupt.
“We have come a long way in setting strong foundations for a financial planning profession that will truly serve and protect the interests of Australian consumers in the next decade and beyond,” he said.
“Not only would a Royal Commission put this on hold, but it would also mean that millions of tax payers’ dollars would be wasted.”
Mr De Gori’s sentiments echoes those of the AFA, which said the money for a royal commission would be better spent on funding ASIC.
AFA chief executive Brad Fox said there have been numerous government inquiries into the industry that have shown where the biggest issues lie, including corporate culture and ethics.
“So let’s concentrate on what we do to remedy them. There is considerable work going on at the moment to look at how ethics is taught and trained for financial advisers,” he said.
“The money would be better spent on providing ASIC with greater resources to police the more than adequate rules we already have in place.”
Meanwhile, more people are voicing support for a royal commission, including Macquarie University honorary fellow Pat McConnell.
In an opinion piece on The Conversation, Mr McConnell said CommInsure’s creation of a claims review panel is an admission by CBA that problems exist.
“By obstructing, obfuscating and bullying, the banks have ensured that a systems-wide inquiry into financial conduct can only be undertaken by a royal commission,” he said.
All it is, is labor chasing election points. Everyone despised banks. They have made it an easy target as people see on a daily basis the fees and so on and the exec pay.
Whereas the Unions commission is not seen by the average joe as being so useful… So it is all a political play for point in an election.
I’d welcome the RC if it results in a reduction of the banks market power !
The banks would prefer to eliminate all non-bank advisers, and LIF is just the start
Some of us seem to forget the banks have the size to offer risk & planning services at NO FEE, and claw the fees back on other bank products, just to kill off the competition. Even the best advising business cannot compete against clients being offered advice at minimal fee costs
RE #3 Damien…
“I just want to provide advice and help my clients achieve what they want. Another layer of compliance through new legislation would see me walk away and I am 43.”
Couldn’t agree more!
I’m 34 and have been in this game since 18 and now hold my real estate licence as a back stop in case I want to change professions in the future (I have an interest and passion for property – not because it’s less regulated and sales).
Out of the 10 hours it takes me to deliver compliant advice, I reckon it takes me around 1 hour to determine suitable strategies and around 1 hour to explain same to client. The other 8 hours is compliance and ‘stuff’.
It’s getting harder to give people advice they need on a win/win basis because my fees keep having to go up to cover all the downtime in our business, so we still make money, but it’s harder to offer that to the broader public because for the younger generation who should be planning for their future now, paying $3-5k upfront and again ongoing to cover my costs will outweigh much of the benefits they get in the first 10 years.
Its funny how the AFA and FPA are now voicing concerns over a Royal Commission into the banks and insurers but were not so vocal in the LIF.
These organisations are too heavily funded by the banks and insurers and are working more for their interests rather than their members and customers.
If a Royal Commission does disrupt some of the reforms that are clearly only in the interests of the banks and insurers increasing profits and not the interest of customers or advisers then this is a good thing.
Our business has spent a lot of time and money over the last 3-5 years making changes to ensure we meet the requirements of FoFA legislation. I would conservatively estimate this has cost $50,000 in time dedicated to completing this work, not to mention opportunities lost because we have been so focused on implementing all the required changes.
Calls for a royal commission ignore the major changes already made to the industry that will one day lead to it becoming recognised as a profession.
I just want to provide advice and help my clients achieve what they want. Another layer of compliance through new legislation would see me walk away and I am 43.
The reality is that the banks,insurance companies and industry funds have had too much influence over the financial planning reform agenda and clearly their track record confirms they are not deserving of such influence. If the royal commission focuses on the best outcome for clients it would be a worthwhile exercize. We need to move on from the banks v industry super fund slanging match (which shows no signs of abating ) and the royal commission may be the disruption required to achieve that.
This is what you get with every monopoly – waste, cronyism and poor consumer outcomes. If there must be regulation, then a ‘free market’ of multiple and mostly non-government (private) ‘regulators’ is what is needed. I imagine it would work much like the ‘responsible entity’ in a registered managed investment scheme. Give ASIC more money?? Only in government does failure actually mean success.