An ASIC official has poured cold water over suggestions that professionalism has arrived, arguing decades-long structural change is required in the financial advice industry.
Speaking at the IFAAA symposium in Sydney on Friday, Louise Macaulay, the corporate regulator’s senior executive leader, financial advisers, said the advice sector required business model reform.
“I think the industry is a long way from being professional,” she said.
“I don't think the structure is in place to encourage the industry to become a profession and hopefully that's something we will see coming out of the current treasury working group.”
Yet even if changes are implemented, a shift towards professionalism may still be years in the making, she suggested.
“I think that will take a while to occur and then the flow-on effect to change the culture within organisations in the industry would almost be a generational thing,” Ms Macaulay said.
Changing cultural norms would be the key to re-building confidence in the sector, she said.
“I cannot use the word 'culture' too much when I talk about the way the industry can try and grow and engender the trust which has gone missing,” she said.
Addressing the same function, consumer advocate Jenni Mack – a former director of Choice and FOS board member – concurred that efforts to drive professionalism without structural change are doomed.
“I think business models really matter,” Ms Mack said.
“If you're running an in-house platform, your incentives and your drivers are to put people on that platform.
“Professionals have a fiduciary duty to the client and where's there's conflict, that interferes with your capacity. It's not a question of managing them; it's a question of getting rid of those conflicts.”
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