In a statement issued last night, the business broker and industry commentator said that the debate around the amendments to FOFA demonstrates that a “balanced approach and outcome” are needed in the financial advice industry.
“It’s not government that’s the cause of the problems and complaints that have been directed towards FOFA but the overabundance of self-interest groups lobbying intensely to ensure that the interests of their particular sector, company or association are met – even if above those of the industry or consumer,” Mr Tynan said.
The “$1.6-plus trillion” pool of Australian retirement savings is the underlying reason why “all the special interest groups comprising institutions, advisers, associations, fund managers etc. have been so active through their lobbyists and lobbying activities”, he claimed.
“There’s a lot at stake,” Mr Tynan added.
The consultant, who heads Connect Financial Services Brokers, called for a balance between “cost remuneration and consumer protection”; “large institutions and boutique providers”, “vertical integration and independent advice” and “a balance between the interest of all parties and the ultimate objective of providing professional advice to consumers”.
Mr Tynan concluded that a “more balanced” approach to advice provision may see the “nearly 70 per cent” of consumers not currently in advice relationships seek the services of a professional adviser.
Easy word that, “balance” yet if one group appears to be losing then they say it isn’t balanced….therefore, we end up with the same lobbyists arguing again…Clear legislation is not in the interests of lawyers and given that many pollies are former lawyers, we have a problem, n’est pas?
Almost all of these “lobby groups” have been around since long before FoFA, so unless they have been poisoning the well for decades then I fail to see Paul Tynan’s point. As for balance, that’s what you get when you take the strong, genuinely-held views of various professional associations, industry groups, etc., and try to nut out a solution which addresses their concerns. Consumer groups must also be a part of this process.
I believe the abundance of lobbyists is a result of a legislation that lacks clarity and application. When you have legal people chuckling over the benefits the ambiguity of the legislation has provided them in generating legal fees through the interpretation of the legislation it is time for a major overhaul. The overhaul is taking place and needs to be supported by all.
If we really want to foster advice relationships and protect the consumer we should be getting rid of fee disclosure statements (historical records) and keeping the opt-in requirement. Clients would then have to be contacted at least every 2nd year and, if only for this reason, a relationship would be maintained. Businesses would have to work harder at giving the client a reason to stay with them. There would be no need to change payment systems (e.g. asset based etc.) as, within two years, if the client hasn’t been contacted, they don’t “opt-in” again and the Adviser would loose that revenue. This would eliminate the situation where clients don’t even know they are still paying an Adviser for no service. What better way to put the client first?