Nationals senator John Williams has lamented that neither the government’s amendments to FOFA nor Labor’s original legislation tackle the advice industry’s “big problem”.
“The previous government’s changes did not fix the problem, this government’s changes did not fix the problem; the big problem in the financial advice industry is what’s called vertical integration,” the senator decreed.
“[The industry] should be torn down and rebuilt; the big six – the banks, Macquarie…and AMP basically run the industry.”
At the same time, Senator Williams called on his fellow upper house members to vote against the disallowance motion in order to “save the value of these great [financial advice] small businesses”.
In a rare moment of Greens-Nationals solidarity, Senator Peter Whish-Wilson – a former Deutsche Bank staffer and finance lecturer – also told the house that vertical integration is the real problem underlying the FOFA debate.
“I am someone who has worked in a bank, has a strong understanding of financial planning and a strong concern for consumers of financial products,” Mr Whish-Wilson said.
“The issue is not that there are commissions on individual products. The problem is that – in aggregate – there is still a volume-based incentive in place [for many advisers].
“The incentives are not just at financial planner level within vertically integrated businesses – it goes right up to management. No one wanted to stop dancing while the music was still playing.”
Senator Whish-Wilson urged his colleagues to vote in favour of the disallowance motion and said it was foolish to enact legislation or amendments to it without seeing the final verdict of the Financial System Inquiry, arguing Australians have a right to know who is an “independent financial planner”.
“I hope the Murray inquiry will look at these issues,” he said.
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