In its submission to government, the Association of Independently Owned Financial Professionals (AIOFP) accused the “authors” of the first tranche of being “completely tone deaf” to events that have transpired in financial advice over the past nine years.
“How many more suicides, broken marriages, lost life savings and widespread mental health problems does Canberra want?” the body wrote.
The AIOFP explained that while the Hayne royal commission’s recommendations centred on curtailing banks and institutions from their “repugnant” fee for no service behaviour, advisers bore the brunt of “unnecessary and expensive compliance impositions”.
“Mysteriously”, the body opined, this tranche of draft legislation gives “immense power” back to “many” of the conflicted institutions.
“This tranche document now inexplicably/bizarrely wants to give the trustees of some of these institutions total power with deciding whether an advisers fees are suitable or not for an adviser’s client,” the AIOFP said.
“Many of these trustees are not trained in financial advice applications, how can they make decisions on a family’s circumstances and the appropriateness of a fee if they have never met the family or analysed their circumstances?
“This defies common sense and provides just another layer of quasi-regulation and costs consumers will ultimately have to pay for.”
Referring to the government’s focus on financial advice over the past year and a half as “preposterous overreach”, the AIOFP called for it to end.
“It is time for all politicians and Canberra bureaucrats to commence treating the financial advice community with the respect it richly deserves, we are now officially classified as a profession and demand to be treated no differently to any other comparable entity.
“The overreach by government over the past 10 years into advice is like no other jurisdiction on earth.”
Digging into the recommendations that form this first tranche of legislation, the AIOFP said that the government’s proposals don’t reach far enough in ensuring protection for consumers.
Namely, on the ongoing fee arrangement front, the body said that while the intention to consolidate annual fee consents into a single document is “welcomed”, “such annual forms are not necessary and fail any reasonable test on the basis of consumer protections or information”.
“These forms merely add to the increased costs of advice. Collectively, they should all be abolished,” the AIOFP said.
“The authors of tranche one must understand that even clients are complaining about the duplication, red tape and direct costs involved – unfortunately, this document addresses no reduction but actually wants to increase it with risk advice consent forms,” the body continued.
Referring to the advice community as a “regular scape goat” for “incompetence of other stakeholders”, the AIOFP signed off its submission by asking Canberra to “finally do something about it”.
The closing date for stakeholder submissions in response to the first tranche is today, 6 December.
All this could have been made redundant if Hayne, instead of layering more compliance on the industry, had recommended that advice be seperated from products.
There wouldn’t have been the need to wrap the industry in red tape, and the cost of advice would be considerably lower than it is now.
More attention should be drawn to the identity of the authors?
There may be differing views of the AIOFP but this really hit the nail on the head and wording very well articulated. I like this. Agree that the FAAA is far lacking with gusto to make these type of statements. Well done. AIOFP
The more things change, the more they stay the same!
AIOFP saying what the FAAA are too scared to.
Yet again, 20 years of ever increasing useless, costly, BS Mass Red Tape Over regulation INCREASES.
Yes people the Draft Legislations QAR 1: DELIVERING BETTER FINANCIAL OUTCOMES [b]REDUCING RED TAPE[/b] AND OTHER MEASURES.
Actually does nothing to Reduce Red Tape and INCREASES RED TAPE with a new Life Insurance Commissions Consent.
Whilst ever we (advisers) have to be “supervised” by a licensee, we cannot expect accountants and lawyers to treat us as fellow professionals, never mind the politicians.
Many consider us salespeople and it’s reflected in the contemptuous manner in which legislative millstones are strapped to us, in spite of there being no justification.
If you think you have the knowledge and professionalism to self supervise, why not become your own licensee?
There is nothing in the regulations that says you have to be supervised by a third party licensee. There is definitely nothing in the regulations that says you have to be supervised by a licensee whose primary reason for existence is to influence its ARs to sell the licensee group’s inhouse product. Yet that is the option most advisers seem to choose?
100% correct, what a huge waste of time and money the QAR was. Politicians should stand aside and let an Industry Body run Financial Services. Just hopeless – please vote them out and give someone else a go that is motivated, energised and can fix the “hot mess”.