ASIC should have umpired ‘misleading’ FoFA frenzy: AFA

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It was ASIC’s duty to step in and address the misleading information about the FoFA amendments being fed to the Australian public.

This assertion is part of the Association of Financial Adviser’s (AFA) submission to the Financial System Inquiry (FSI), headed by former Commonwealth Bank chief David Murray.

The submission notes that section 1(2)(b) of the ASIC Act includes an objective for the regulator to promote the confident and informed participation of investors and consumers in the financial system.

AFA COO Phil Anderson told Wealth Professional that he wants to see the FSI use the lack of mediation by ASIC as a case study for what could be done better in future.

“We are raising that question because we think that the debate hasn’t been conducted in the most transparent of fashions and it would have been beneficial to have an umpire step in,” he said. “It would have put ASIC in an uncomfortable place, but we believe it’s something that should have been considered to the extent that it’s part of the role of ASIC.”

The Australian public’s negative perception of the financial advice industry has been fuelled further by the “inaccurate reporting” over the past two months in relation to the FoFA amendments, Anderson said.

Another part of the AFA submission addressed a serious concern about the risk of financial advisers flocking to leave over the next five years.

Alongside generally negative public perception about the profession, this risk has been compounded by the amount of recent regulation change, and the high number of baby-boomer generation financial advisers in the industry.

“[As an adviser] as you get older you need to make a decision to ride the regulation wave or consider retirement,” Anderson said. “We’re also concerned the negative media coverage doesn’t paint financial advice as the good profession it should be.”

As it stands only two in ten Australian’s seek financial advice, and now thanks to the FoFA debates the remaining 80% of the public will have a tarnished idea about the profession, he said. A change in this perception, along with better education is the only thing that can solve the financial adviser flight risk.

“People need to appreciate what financial advice is about and what value they get from it – then we can start having this operate as an industry with a greater flow of university graduates.”

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