In the paper, the peak body proposed a new framework that could reduce the cost of advice by almost 40 per cent (near $2,000) through recommendations that include abolishing the safe harbour steps for complying with the best interests duty and removing “complex” SoAs in favour of a letter of advice.
KPMG’s analysis of the FSC’s recommendations found that the cost of providing financial advice would be reduced from $5,334 to $3,466, would save advisers up to 32 per cent of time when dealing with clients and allow them to provide advice to an additional 44 new clients each year.
While groups such as the Financial Planning Association of Australia (FPA) and The Advisers Association (TAA) backed the FSC’s recommendations, others including dealer group Synchron and the Association of Independently Owned Financial Professionals (AIOFP) were not as supportive, with AIOFP executive director, Peter Johnston slamming the paper as “technically incorrect”, “offensive” and “politically motivated” in an open letter.
An FSC spokesperson responded to the industry reaction in a statement given to ifa.
“The FSC welcomes engagement on the white paper on financial advice and whilst there has been debate on which proposals would have greatest impact on the cost of providing advice the feedback we have received from the advice community has been overwhelmingly positive,” the statement read.
“We are looking forward to engaging with the AIOFP and other advice associations further to identify common areas of concern as it is important for the industry to speak with one voice during the upcoming quality of advice review.”
The spokesperson noted that many of the proposals in the white paper are legislative and are not within the powers of regulators.
It comes after ASIC estimated last week that over $25 million will be recovered from the advice sector for the 2020-21 financial year.
In its cost recovery implementation statement, the corporate regulator said the “decision to cap levies” and with an estimated 18,750 advisers and 2,934 licensees operating, $25.8 million will be recovered for the year.
And who are the spokespersons for these “Industry Groups”?
How reflective of Advisers at “the coal face” are they?
Are the Industry spokespersons actually conflicted? Are they “pushing their own barrow?
The sooner we get business people out of the Industry and leave Advisers to advise – the better.
The FSC says “speak with one voice” ok so let us financial planners and financial advisers speak this time given when you spoke for LIF look how badly that turned out for us…!
The FSC is only interested in flogging product. They should stay away from financial advice. If the government wishes to fix the problem created by the FSC, ASIC and their own stupid legislation, they need to get out of their ivory towers and stop talking to government bureaucrats and industry executives who are far removed from the delivery of financial advice. The only way to solve this mess is to speak to financial planners. A panel of experienced, practicing financial planners needs to be formed to inform and oversee ASIC and Treasury’s management of our profession.
True, but only if those financial planners are not conflicted by being licensed through product companies. Arguably the planner perspective has been well voiced to government for many years by the FPA. But unfortunately the FPA has been dominated by planners licensed by product companies. The “planner perspective” was hijacked to favour those product companies. That is ultimately why the FPA has so little credibility and has been a lobbying failure.
100% agree. This is one of the main issues that has led to where we are today and why we keep getting really poor outcomes from our “Industry Bodies”.
Given it was the FSC members that were responsible for this whole mess, how about they get their beaks out of it.