The industry body has called out submissions issued to Treasury by consumer advocates CHOICE and Industry Super Australia (ISA).
In a statement, the AFA said that “not all submissions are supportive of financial advisers” and some recommendations put forward “would have a seriously detrimental impact on the financial advice profession and their clients”.
The AFA said CHOICE’s submission is “full of criticism of financial advisers”.
“In just their second sentence, they start with a statement that ‘conflicts of interest that remain in the advice industry continue to contribute to poor outcomes for many people’. What proof do they have that this is true in the post FoFA/LIF/Professional Standards and Annual Renewal era?” the statement read.
The group argued that nothing in CHOICE’s submission – which recommended to ban life insurance commissions and ban asset-based fees – will help make advice more accessible or affordable for Australians.
Regarding ISA’s submission, the AFA opposed the super fund’s recommendations to ban ongoing advice fees within choice funds and ban life insurance commissions.
“It is important to note that in our first scan of the submissions from the large industry funds, there is no similar call for the banning of life insurance commissions. Much has changed over recent years and advisers are increasingly working with industry funds and considering existing group super insurance arrangements as part of assisting clients,” the AFA said.
“It is not uncommon for an adviser to recommend that a client retain their industry fund and the default insurance within it, particularly where they have reduced insurance needs or where they have health issues.
“Financial advisers have the Best Interests Duty and as part of that, they need to consider a client’s existing insurance arrangements, and only recommend moving them where to do so would be in the client’s best interests.”
ISA was also called out on clawback requirements which the fund said “reduces the disincentive to recommending switching products within the clawback period”.
The AFA slammed the recommendation as “nonsensical”.
“We welcome the Quality of Advice Review consultation process and the open debate on how to fix the problems in the current financial advice regulatory regime and operating model, however, the debate needs to be based on the facts and submissions should be subject to challenge,” AFA’s statement concluded.
“We look forward to further constructive debate as the review progresses.”
A number of industry groups have publicly issued their QAR submissions to Treasury in recent weeks, including the FPA, SIAA, ClearView and the Joint Associations Working Group (JAWG).
The QAR, to be conducted by Michelle Levy, will be provided to the government by 16 December this year.
Well done…Quite rare for an industry association to actually stand up for advisers. Always in the past have been afraid to upset some insto etc etc.
Good on AFA for calling this out. Advisers have come to this stage because no one challenged these unfounded claims by ISA mainly. Our associations were complicit in this outcome for good financial advisers as no one spoke on their behalf. Not all financial advisers are crooks!
Industry super funds are hypocrites – the biggest conflict is their “advisers” not being able to tell their members to change their super fund to another better super fund (even if it is another industry super fund). Why is this conflict not being called out?
Choice is right, conflicts of interest are what is holding this industry back, but they are wrong in that it is not asset based fees.
The biggest conflict of interest is advisers who recommend products that their employer has a financial interest in, and this includes industry super funds. If Government had the kahuna’s to make it easier and incentivise advisers to work 100% independently of any of the products they recommend this would solve many of the problems.
Re asset based fees, this isn’t a problem as such, but the problem is advisers can bury this on page 18 of their SOA knowing full well that the client won’t really understand it.
The Code of Ethics doesn’t see advisers recomending in-house products to clients as a conflict as long as the same methodology is applied to the selection of in-house products as are applied to external products…
That depends on how, and by whom, the Code of Ethics is interpreted. That’s why there has been such controversy and confusion over Standard 3. There is a wide range of views about what Standard 3 means in practice, and the holders of those views are all insistent that their particular interpretation is correct and everyone else is wrong.
Why would anyone take Choice and the Industry Funds lobby group seriously? They both view financial planners as competitors. Choice want us out of the way so they can sell more subscriptions to unadvised consumers and industry funds prefer to flog their products directly. Everything they have ever said about financial advice should be viewed in that context.
Conflict of interest is the intra fund advisers they have working for them keeping people in under performing fund… wonder how much intra fund advice was given to all this close industry funds…..
How surprising……