A number of financial advice industry figures have backed the idea of open approved product lists after it was brought up at a recent parliamentary joint committee hearing into the life insurance industry.
Speaking to ifa, ClearView managing director Simon Swanson said open APLs are essential for client-centric advice.
“At ClearView, we believe that advisers are experts in their field and they should be able to choose the most appropriate solution for their clients,” Mr Swanson said.
“An open APL is essential if advisers are to exercise their professional judgement and provide objective advice.”
Jenesis Consulting managing director Jenny Pearse also said licensees should have open APLs.
However, she noted that for truly open APLs to exist, the accountability of product failure must sit with the product manufacturer instead of the adviser and licensee.
“I do believe that licensees should carry open approved product lists, but therein lies the challenge,” Ms Pearse said.
“The licensee is considered the gatekeeper between the regulator and the adviser with respect to the best interests of the client and the appropriateness of the products selected to implement the advice.”
However, IFAAA president Daniel Brammall thinks the term ‘open APL’ is “a contradiction”, since an APL is limited to the products that are on it meaning it is closed by definition.
“What’s an open APL? Any product can get on it? That’d be counter-productive to having an APL in the first place,” Mr Brammall said.
“Presumably an open APL means any product can be considered, which still means it’s a limited APL doesn’t it?
“There’s no law against that, but there’s also no law saying you have to have an APL either, so why have one at all?”
Align Financial director Darren Johns suggests that an alternative is to have advisers list their top institutions in which they recommend products.
“Having an APL isn’t required under the Corporations Act, so I’m not sure how you regulate such a thing,” Mr Johns said.
“If we are trying to help clients get access to advice without influence, then I suspect there are better ways to achieve this.
“In the lending world, brokers are required to list the top five institutions that they place loans with. Perhaps a similar approach could work in the advice profession.”
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