The Financial System Inquiry panel has sought feedback on the push to more clearly distinguish between independent and restricted financial advice, looking to the UK model as a potential blueprint.
In an interim FSI report handed down this morning, the panel – which is chaired by former CBA boss David Murray and includes former AMP boss Craig Dunn – raised a number of issues in the financial advice sector that it is examining closely, requesting additional stakeholder engagement.
On the issue of independent financial advice, the interim report reveals that “some submissions argue that lack of structural independence can impair the quality of advice” while others argue it is “not ownership but remuneration that creates conflicts that reduce quality”.
While making clear the FSI’s definition of independent “does not equate to the definition of independent in the Corporations Act”, it also looks to the UK separation of “restricted” and “independent” advice as a potential model for Australian adoption.
Specifically, the report seeks “further information” on whether there is a case to “more clearly distinguish” between licensing segments, whether “consumers would be likely to understand the difference between aligned and independent advisers” and whether they would be “sensitive to differences in the price of independent or aligned advice”.
At the same time, the report concludes that “there have been notable instances of losses incurred by the customers of financial advisers from both independent and aligned groups”.
More to come.
Several firms have been impacted by the corporate regulator’s action.
Super funds must now have a retirement income strategy in place.
Vanguard has called for a complete overhaul of the advice industry.
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