The AIOFP and IFAAA will use their positions on the government’s adviser register working group to push for a formal distinction between independent and institutionally-owned advisers.
Reflecting on the latest Roy Morgan research – which found an increase in the number of consumers confused about financial planning licensee ownership – AIOFP executive director Peter Johnston told ifa that it is time for the culture of murky ownership structures in financial services to end.
“Institutions are permitted to operate ‘quasi-independent’ distribution channels that confuse consumers into thinking they are getting independent advice,” Mr Johnston said.
“We estimate there are over 14,000 advisers operating in this fashion and consider it a critical issue to be included in the financial adviser register to finally deliver full transparency to consumers to make informed decisions.
“The institutions’ vertically-integrated models have been confusing consumers for the last nine years and finally something should be done about it.”
The AIOFP is calling on the other members of the industry working group – which includes a range of political stakeholders from across the financial services industry – to support a move to explicitly distinguish between “independently-owned and institutionally-owned” advisers in the register.
Mr Johnston argues that even licensees that have a minor stake held by a financial institution should fall into the latter category, since these transactions present a “bigger threat to consumers as the business owners are incentivised to get as much FUA into the new owners’ products as possible”.
Comments made by AMP executive Steve Helmich at a recent Lonsec roundtable suggesting cross-subsidisation in the advice market may eventually become redundant indicate “the game is up” for vertically-integrated advice providers, Mr Johnston added.
ifa understands that fellow industry working group member Daniel Brammall of the IFAAA has indicated initial support for a demarcation between institutionally-owned and independent advisers in the government’s proposed register.
The Boutique Financial Planners lobby group within the FPA has also been a longstanding proponent of a more transparent ownership disclosure regime.
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