An AMP-linked financial planning practice principal has questioned the thinking behind recent calls for a legal distinction between independent and restricted financial advice.
Responding to former judge Kevin Lindgren QC’s call for legislation differentiating between independent financial advice and services offered by advisers licensed by major product manufacturers, a number of financial advice community stakeholders debated the issue on a LinkedIn forum yesterday.
Commenting on the social media thread, Michael Camm, managing director of Bendigo-based Genesys authorised representative firm Venture Financial Planning, questioned whether “yet another piece of questionable legislation” would be beneficial for the industry or consumers.
“The issue is not so clear cut,” Mr Camm said. “For all intents and purposes, I could call myself an IFA because I choose products for clients that are in their best interests from an extensive approved [product] list but I cannot call myself independent because AMP own[s] the dealer group that I operate under. So even though I would give "independent advice", I would be regarded as a salesperson under the proposed legislation.”
Mr Camm explained that he has 22 years’ experience in the industry and is a Certified Financial Planner, indicating that these qualifications are perhaps more important than licence ownership.
Offering the contrary position, Shartru Wealth Management chief executive Rob Coyte said the introduction of legislation as proposed by Mr Lindgren would cut through some of the noise created by the FOFA parliamentary debate.
“Given a lot of the content around the debate with FOFA I think if this initiative was brought in then this would remove a lot of the need for discussion,” Mr Coyte said.
“I don't think anyone is saying that the advice [offered by an institutionally-aligned adviser] cannot be sound it is just a matter of disclosure. If the licensee is a product provider then they are aligned ....its simple and clear cut.”
The call for a legislative distinction between restricted and independent advice – as implemented by the UK government in the Retail Distribution Review reforms – has gathered pace lately, with the SMSF Professionals’ Association of Australia calling for a licensing regime for independent advisers in its submission to the Financial System Inquiry.
Hewison Private Wealth director John Hewison, a former director of the International Financial Planning Standards Board, has also proposed a similar initiative in an ifa blog post this week.
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