In its 2020-21 budget submission, the FPA recommended that the government monitor the rising cost of advice through government fees and charges, cost-recovery levies and increases to professional indemnity insurance premiums.
“The government should start by establishing the scale of the challenge facing Australians in affording personal financial advice, particularly due to escalating regulatory costs,” the FPA said.
“Without this evidence base, decisions about future reforms will not be informed by a clear picture of the consumer and their interests.”
Lack of PI insurance competition a problem
The FPA noted that the lack of competition in professional indemnity (PI) insurance is resulting in rapid increases to insurance premiums for financial planners.
As a result, it recommended that the government monitor the operation of the PI insurance market in Australia and considers the options to promote confidence in the regulation of financial planning and transparency in the setting of PI insurance premiums.
“A well-functioning market for PI insurance is critical to ensure financial advice remains available for Australian consumers and that consumers remain protected,” the FPA said.
“As PI insurance is a corner-stone of the regulation of financial advice, the government has a role in ensuring that it remains available, affordable and gives appropriate coverage.”
Holistic financial plans should be tax deductible, says FPA
In addition, the FPA said tax deductions are already available for consumers who seek advice on the management of a specific asset or investment that generates ongoing taxable income, but the same tax deduction is not available for an initial holistic financial plan.
As a result, the industry body recommended that the government provide a tax deduction for fees associated with the preparation of an initial financial plan and for subsequent reviews of a financial plan.
“The lack of consistency in the approach to tax deductibility is an obstacle for low and middle-income Australians in seeking financial advice. All financial advice should be subject to the same ability to claim as a tax deduction,” the FPA said.
“If the government is concerned about the fiscal impact of this approach, it could institute a cap on the amount that can be claimed as a deduction, ensuring all Australians are able to benefit from the arrangement equally.”
The Puppet/Voice of large institutions raising this is actually doing us more good than harm. The saying “if you’re not part of the solution you’re part of the problem” springs to mind when I think of the FPA and their unprofessional partner program. Given the FPA is raising it it will NEVER EVER now get legs. FPA Advisers = Scum
PI is next flash point. They demographics are going the way of Private Health Insurance. Shrinking adviser # base to support a litigious system. Unprofitable for insurers. Premiums going one direction
There are going to be a LOT of people not being able to afford advice soon. Not a peep out of the “consumer lobby” about that, is there?
That’s because so called “consumer associations” such as Choice and CALC have been hijacked by self promoting extremists. There is no-one representing the interests of ordinary consumers anymore.
Cost to provide services are increasing significantly. Tax deductible advice, if provided by a licensed financial planner would help.
Seems like these escalating costs should have been on the FPA radar around the time of the Ripoll enquire since it was then ALL advisers were patiently expecting our representative bodies to explain the bleeding obvious outcome …seems it takes 12 years for ‘sleeping beauty’ to awaken from this slumber…
Too little, too late FPA. Until you stop receiving payments from the institutions that started this mess how could anyone listen to you.
Is it just me or does anyone think all of these submissions are falling on deaf ears?
It will take quite a long time before the powers that be figure out just how expensive financial advice has become.
Sorry Jason but like many advisers you’ve been asleep at the wheel for some time. You don’t quite understand that Treasury fully appreciates that the FPA is paid (unprofessional partner program) by AMP & the big four. That relationship didn’t work out when Labour was in Government and now with the Royal Commission it’s just confirm there opinion. The only solution is the entire board of the FPA to step down and the CEO resign.
Gee, what could go wrong here? Are we inviting the government to cap our fees?
Dante I suspect does not poses the foresight to make that connection but Rob, that seems to be the next logical step for this mess.
it would not surprise me in the least. they will probably say, unskilled worker so fee must be capped at $22 per hour the same as a McDonald’s worker.
just what we need to put the nail in the coffin. thanks a lot FPA.
Let us look at the facts-the big dealer groups, banks and the next two biggest caused a very high percentage of the damage and certainly not all skeletons were exposed. Who wears the discredit- us, the financial planners at the coal face. There is no doubt that there were/still are planners out there that should not be in the industry and slowly those still misbehaving are being exposed. But here is the kicker- the good people are paying for the sins of the former mentioned. reality is, the government and others don’t give a damn about our issues- political cleansing is their aim. So fellow planners, do any of you think there will be any rethink or positive action from the government. Reality is- suck it up because it is a cost of doing business and we need to survive- up go the fees.