In its second submission to the Financial System Inquiry, the Australian Institute of Superannuation Trustees has called for the provision of general advice over the counter to be prohibited.
In its submission, AIST said the ability to influence a person’s decision without the duty to act in the person’s best interests is a “cause of great concern to AIST in a mandatory retirement savings system where people’s interests should be protected”.
AIST argued that member confusion in regards to differences between factual, general, and personal advice has been “exacerbated through FOFA only dealing with personal advice”.
“All members accessing information whether it is factual, general or personal are entitled to competent, diligent and safe advice,” said the submission.
AIST also called for the provision of general advice over the counter and its impact on member switching to be included in a review of MySuper.
The submission also argued there should be ”terminology that makes it more obvious whether the giver of the advice is independent of, or tied to, a financial institution”.
The degree of concentration of financial advisers in the banking sector coupled with remuneration arrangements offered to financial advisers was also a matter of concern since this “impacts the best interests of members”, AIST said.
“Conflicts of interest can exist between the fiduciary duty to act in the best interests of members and beneficiaries, and making profits for shareholders,” the submission stated.
AIST referred to findings by the Customer Owned Banking Association that showed “Australia has the most concentrated banking sector of any G20 country”.
The submission also noted research by Roy Morgan that found financial planners continue to recommend in-house products and that consumers continue to be confused about which financial planners are independent.
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