Will enshrinement do the job?

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Industry professionals have questioned whether enshrinement of the terms ‘financial planner/adviser’ will be enough to improve consumer protection.

The SMSF Owners’ Alliance, the SPAA and the ISN have all called for greater measures to improve the sector, on top of legal protection of the terms.

“We strongly believe that improving the skills and competencies of financial advisers is the most important facet of increasing the professionalism of financial advice and giving consumers more protection. Increased competencies of advisers will ensure the best outcomes for consumers of financial advice,” the SMSF Owners’ Alliance said in its submission.

The ISN supported the bill but recommended an increase in the minimum requirements over time – particularly in relation to minimum qualification requirements.

Robert Brown, fellow of the Institute of Chartered Accountants, had strong reservations about the effectiveness of the bill. He said that enshrinement of the terms could create a false sense of consumer protection, and that they should only be used by those who did not receive any form of commissions, percentage-based asset fees or other conflicted remuneration.

The AFA supported the bill in its current form and said it was leading the market towards a narrower solution “rather than leaving them guessing, as thy currently do”. AFA CEO Brad Fox said it would also improve the relationship between accountants and advisers, reminding accountants of where their authorisation starts and stops.

“It would help the accountant have the conversation with a consumer to say, ‘you do need this sort of help, by the look of it. Here is someone who can actually help you’. This is the occupation you need to talk to.”

AFA COO Phil Anderson said it would help prevent the sector’s reputational damage from those holding themselves out to be financial advisers when they were not authorised to do so.

Do you think the measures are enough, or should there be greater requirements?