Former Labor MP Bernie Ripoll has strongly rejected the proposition that FOFA is to blame for the increasing costs of financial advice, despite research showing that 51 per cent of advisers have raised fees due to regulation.
Speaking exclusively on the most recent episode of The ifa Show, Mr Ripoll - who was instrumental in the development of the FOFA legislation when he was in parliament - dismissed the question as to whether the removal of product commissions led to advisers needing to raise their fees thereby making advice less accessible.
"I’ll give you a blunt no. Not really. FOFA was important for a whole range of reasons, really trying to separate advice from product and we’re not quite there with that," he told ifa.
"There's best interests duties. It's made for a better market, a more professional market. I'd like to think that there's almost no one left today that think it's a bad idea."
A recent ifa poll, which surveyed 520 respondents, found that 51.7 per cent of advisers have had to increase their fees due to new regulation.
Mr Ripoll said he has sympathy for the fact that regulation and government interference with advice businesses stifles growth and innovation. However, because the industry has proven that it cannot check itself effectively, the government is often left with no choice but to step in and regulate at the last minute.
“There’s a lot of low hanging fruit which I've always believed the industry could pre-empt the parliament. Fix the issues internally, fix the issues that are really clear and obvious and there's less work for the parliament to do," he said.
"The more that people actually get together and agree on a path the more you can resolve some of these issues without the need for heavy handed regulatory reforms which are always, in the end, a little bit clumsy.”
Practice management consultant Jim Stackpool of Certainty Advice Group agrees with Mr Ripoll, telling ifa the reason some advice firms are increasing prices is actually due to a growing consumer demand.
“Have advisers had to increase fees due to regulation? No. We are finding that our advisers generally, not all of them, who are building professional advisory firms along the lines of FOFA are increasing fees to satisfy demand," he said.
"They can't keep doing all they've done for every client they've ever had. Our model is a more-for-less model, so doing more and more for less clients."
“For me, it’s the fact that there are going to be new costs as the advice market opens up and as it works towards becoming a profession. It's a ticket to the game.”
To listen to the full interview with Bernie Ripoll see the latest episode of The ifa Show:
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