Industry's "million-dollar question"

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Many financial advisers are groaning under the weight of regulation and the Financial Planning Association says it is already working with the government to make improvements – but no one knows when change will occur.

Most of the points brought up by financial adviser Peter Corrie in a recent letter to Treasurer Joe Hockey are already being focused on by the new Liberal government, FPA chief executive Mark Rantall says.

Corrie had become concerned with the lack of action by the Liberals to correct what he termed “Labor’s regressive over-regulation” and hoped to spur on changes to do with superannuation commission, conflicted remuneration, ASIC power and shadow shopping, and grandfathering rules, among other things.

But Rantall says the FPA is working with the government to help them implement the 16-point plan outlined in their election promises, and that changes will eventually go ahead.

There are four priority areas, says Rantall. These are removing opt in, clarifying best interest duty, reviewing fee disclosure statements and removing the ban on group life commission.

“All these issues are currently being dealt with. What Peter Corrie has brought up are also significant issues for our members.”

The government and FPA are also currently discussing whether grandfathering provisions – which restrict authorised representatives transferring from one licensee to another – need to be fixed through regulatory or legislative changes.

Rantall says it is “hard to say” whether the grandfathering rules came into play through design or chance.

But as Corrie puts it: “The mind boggles as to how this ever got past the goalpost…Their abolition will restore competition in the advice market.”

While the government has promised to fix up the problems plaguing the financial services industry, the timeframe remains unclear.

“That’s the million-dollar question,” says Rantall. “The government’s priority is removing the carbon tax, but it would be great if we could see [financial industry reforms] introduced in November.”

More stories:

Labor damage control crucial, says adviser

Grandfathering: A way around it for advice firms

Shorten’s shadow ministry causes ‘Ripolls’

  • James Howarth on 5/11/2013 12:42:34 PM

    "Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government." --Milton Friedman

  • Alistair on 5/11/2013 12:27:43 PM

    The FPA need to take a much more strident approach. They need to take the current government to task and highlight concerns of the FP industry as it impacts on the very group that the Liberal Party say they represent. Small businesses. Let alone other major concerns going forward such as that of the retirement outlook, cost of living and other fiscal pressures on the nation bought about by ideals driven garbage under the mask of "Labor Values".
    While this current conversation between the Liberals and the Industry associations drags on in endless conversation and committees and cups of tea and biscuits, businesses are hurting, competition is stifled and parasitic financial institutions are clearly demonstrating their desire to hurt our industry further by doing very little to assist us in the FP world. Why, as they simply do not care and will benefit most when we are gone. Who loses is simple, our client as the industry is driven back in time to the bad old days of product selling.
    Lets be honest, as advisers, we do not seek to harm our clients. We do have their best interest at heart in each word we give in a Statement of Advice or assistance we give when as a result of a calamity in our clients eyes, we are there to say here is a cheque to help you and your family at a time of hardship or despair.
    The regulators fail to understand what we do. Labor when in office could not care less about our industry or our clients, only about themselves staying in office and ensuring they looked after themselves and their union mates.
    Well, our association, the FPA need to do more.
    Indeed, this is a great industry and has a lot to contribute in terms of prosperity for our clients and assist in the fiscal outlook by ensuring clients are largely if not completely self funded, thereby removing a large and getting larger tax burden on the nation.
    Now surely, the Liberal Party should understand this simple fact and assist our cause in the removal of draconian regulations and paperwork that are hurting the goose that can lay a golden egg for the economy and allow us to do the one thing we as an industry are great at. Allow us to go back to looking after the client properly with advice. Not jargon and paperwork where for the large part the client cares less about.
    Its that simple. If this government cares about this industry, its many thousands of small business owners and their employees respectively, it will act. It needs to do so now. Time is hurting more and more of us.

  • Obverver 101 on 5/11/2013 10:06:42 AM

    The Grandfathering will impact the transfer of commissions not the transfer of license, afterall is it not time that licensee hopping stopped as well , with the exception of a Merger or Acquisition scenario of course. The reality is that Professional Status and Fiduciary Duty do not go hand in hand with commission based product selection...and yes we all know that the commission rate does not influence all advisors....maybe the middle ground is to have flat rate commissions only like they do in General Insurance for the life of the contract ( say 10% x Premium???

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