AIOFP executive director Peter Johnston has defended recent criticism of the FPA, revealing the beef stems from a long-held gripe about the rival association’s role in the original FOFA negotiations.
Reflecting on his decision to “ask hard questions of the FPA in recent times” – culminating in the publication of an open letter to FPA chair Matthew Rowe – Mr Johnston told ifa that he holds the FPA largely responsible for not stopping the “independently-owned sector” from becoming the “disadvantaged party” in the negotiations leading to the enactment of FOFA in 2013.
“The ALP government eventually chose to deal with the FPA, and not others, on mainstream financial advice matters,” Mr Johnston said.
“What did the independently-owned sector get at the FOFA table which was represented by the FPA? We got a ridiculous and highly discriminatory decision that accepting an administration profit share of say 20 per cent share from an institution’s platform was conflicted remuneration when [SMSFs and vertically integrated models] can take 100 per cent of the administration fee to cross subsidise practice infrastructure and not be considered conflicted.”
Mr Johnston said that while SMSF specialists and risk specialists were represented in the FOFA negotiations – by SPAA and the AFA respectively – the “independently-owned sector” was not able to lobby against this element of the FOFA legislation as “commercial and political reality dictates that the FPA had no choice but to act in the best interests of the majority of their members”.
Describing this outcome as “the greatest travesty of justice and Machiavellian moment in the industry’s history”, Mr Johnston also called for a new approach to the governance of industry associations which mandates segmented membership.
“The government and regulators may think they are dealing with a body representing the entire industry only to find the opinions and proposed solutions only suit a specific sector,” he said.
“To create and maintain a level industry playing field going forward, there should only be member-homologous associations.”
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 15 Nov 2018We’ll lose advisers through FASEA but it’s necessaryBy Adrian Flores
- 15 Nov 2018ASIC flexes its muscles at independent advisersBy James Mitchell
- 15 Nov 2018FPA hands down $50,000 fine on Sam HendersonBy Adrian Flores
- 15 Nov 2018Adviser reviews critical to client retentionBy Adrian Flores
- 14 Nov 2018ASIC bans financial services representativeBy Eliot Hastie
- 14 Nov 2018Fintech should make advice ‘enjoyable’By Adrian Flores
- view all