Opposition to enshrinement ignored by House

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The financial services sector has welcomed the passage of the Corporations Amendment – including enshrinement of the terms ‘financial adviser’ and ‘financial planner’– through the House of Representatives.

The legislation has been reviewed and supported by the Parliamentary Joint Committee on Corporations and Financial Services, with the main opposition coming from accounting associations within Australia.

Robert Brown, fellow of the Institute of Chartered Accountants, expressed strong reservations about the Bill, saying that FoFA reforms were compromised. In particular, the use of commissions paid on individual life insurance policies and percentage-based asset fees on investment products. Brown said that the bill could have the unintended effect of misleading consumers as to the nature of advice they received:

“…consumers of financial services are likely to incorrectly conclude that by consulting what amounts to a ‘government endorsed’ licensed ‘financial planner’ or ‘financial adviser’ that they will be dealing with a professional person who can be relied upon to act in their interests without the improper influence of conflicted remuneration…”

The FPA has expressed their elation at the news, after advocating for the change for more than a decade. General manager of policy and standards, Dante De Gori says they have now passed the biggest hurdle and there is only one more step before the terms are enshrined in law.

He doesn't expect there will be any problem passing through the Senate, which could be any time between 17 and 27 June, but says there are no guarantees.

Brad Fox, AFA CEO, says the Bill is an important step in creating consumer understanding of the role and responsibilities of a licensed provider of financial advice. “It will help consumers identify a trained, qualified provider from any other individual purporting to have this expertise,” he says.

The AFA is pleased that the Bill has now passed the House of Representatives and will await the outcome from the Senate.

The Bill will also implement reforms that promote a deep and liquid corporate bond market, says the Minister for Financial Services and Superannuation, Bill Shorten, providing an alternative funding source for Australian companies and increase competitive pressure on lending rates to businesses.

  • Conservative accountant on 4/06/2013 10:08:37 AM

    Barry an accountant can mean anyone who does the accounts. I have walked into a business where they have asked me if I want to talk to the accountant. No degree nothing. A number of comments with all this. Don't get out of your depth with giving advice. Know your limits and maintain your independence. I do believe it is a good move to have terms enshrined if it makes the planning industry more credible.

  • Innocent Observer on 3/06/2013 12:47:59 PM

    I really don't believe this is being debated. Personally I don't think it's going to necessarily add anything to the way we're viewed by the public, but if it stops the odd crook from using the "financial adviser" moniker to sucker in clients then it's a good idea. ....after all, isn't this the reason behind the proposal??? If it is, enshrine the term and move on. (and if "accountant" isn't a protected term, enshrine that as well)

  • James Hodder on 29/05/2013 4:57:52 PM

    While I agree with the comments made by Peter and others, it is useful to point out that the comments in this article were from an accountant [a term not enshrined in law] Good Accountants are conservative and ,in my experience , do a good job in the main, in advising their clients in a way that , at least in their experience, is in their client's best interests. There are in business , and are looking to make a living so you will be able to find instances of overservicing etc but on the whole they provide a valuable proffesional service. They are ,no doubt, feeling a bit miffed at Planners who have had their handle enshrined... while theirs has not.

  • Peter O'Toole on 29/05/2013 1:34:48 PM

    Robert Brown - Your comments are nonsense. There is no issue of implied Government endorsement arising from the enshrinement of the terms. There is no implied endorsement in regard to other restricted terms like stockbroker, futures broker & architect. Perhaps you would prefer the current situation whereby unlicensed people can add to their deception of clients by using the terms financial planner or adviser? Currently, just because someone holds or is covered by an AFSL – does not imply a Government endorsement. If you are concerned about planners / advisers not acting professionally & in the client’s best interest ensure they are members of the FPA ,whose members are contracted to do so under client first rules that pre date FoFA. In any case as you should already be aware, FoFA provides for a legislated best interest test.

  • Ben (CFP) on 29/05/2013 12:14:21 PM

    Barry (above) SPOT ON! SS (above) SPOT ON! Robert Brown is only interested in what's in it for him and the accounting industry. He couldn't care less about clients. And what a pathetic thing for him to say. Obviously he does not consider us professionals. Perhaps he should look in the mirror based on that comment. It is about time our industry stood up and received some recognition for the work we do. Many obviously do not realise the significant impact we have on people's lives, as well as the economy. We improve lives along with the general well being of the economy. Helping someone have more at retirement so they don't need to draw on/as much on the public purse - how is that not professional Mr Brown. Wake up to yourself you selfish individual!!!

  • SS on 29/05/2013 10:13:22 AM

    Formalising the terms financial planner and adviser can only be a step in the right direction. Robert Brown may wish to concentrate on his own members rather than worry about how others may be paid. His comments reveal more than a hint of prejudice and jealosy from the acountancy fraternity. As long as planning practices can command multiples up to 4x that of accountancy books, I expect the cheap pot shots will continue.

  • Barry Crewther CFP on 29/05/2013 9:50:59 AM

    Our industry has made massive strides towards being recognised as a profession. We're not there yet but the efforts of those to professionalise financial planning should be commended and enshrinement of the term financial planner and financial advisers is that recognition. Afterall only accountants can call themselves accountants; and only lawyers can call themselves lawyers. It's about time that only financial planners and advisers can call themselves financial planners and advisers.

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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