There have been concerning examples of consumers who needed one-off financial advice but were turned away by advisers who could only deliver full, holistic services with the price tag to match, the AFA has said.
Speaking on a panel at the FSC Leaders Summit last week, AFA chief executive Philip Kewin said the inability of consumers to obtain advice on their terms is a major barrier to opening up advice to the Australian public.
“I received a complaint where a consumer needed financial and legal advice in order to get a loan from their bank and this person went to four financial advisers – all of whom said they could not just give advice – they would need to get an insight into the client’s circumstances in order to give full, holistic advice which they would have to pay for,” Mr Kewin said.
“This person was outraged because they couldn't get advice cost effectively – and I know that might seem like a strange circumstance but it does come up a lot.”
Mr Kewin said that this is a consequence of increased regulatory costs that advisers are having to pay for, which ultimately get passed on to Australian consumers.
“Everything that is happening is increasing the cost to serve and it is potentially a real challenge and with things like ASIC funding and the compensation scheme of last resort – only the consumers who have lots of money will be able to get advice,” Mr Kewin said.
“We need to review how things like ASIC funding and the compensation scheme translate to advisers – I think you'll find that there'll be a lot of good advisers who [are] funding poor activities and we’ve stated that in our submissions around ASIC funding – we don't think that there should be a lot of time and money spent on the poor advisers and then the good advisers have to pay for that – because it's actually not those advisers paying for it, it's a cost that gets passed onto consumers in the end that raises the threshold for general advice.”
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