The recently enacted Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 has ignored the “elephant in the room” – vertical integration and conflicts, according to Assured Support.
The firm’s founder, Sean Graham, has urged financial advisers to look beyond the legislation and address deeper challenges as advice emerges as a profession such as conflicts, capability, and confidence.
“The act does not address the ‘elephant in the room’ – vertical integration and the insidious impact it has on advice quality,” Graham said.
“The act focus on agents, rather than principals, and their focus is deliberate. In fact, their emphasis on professional standards is an implicit acceptance of the ‘bad apples’ theory too often used to normalise cultural failures.”
Graham outlined three risks that could hinder the effectiveness of the Professional Standards Act:
- Time: the short timeframe and the large-scale agenda would drive the Standards Board to make decisions based on the timetable rather than on sufficient consideration and analysis.
- Consultation – the need to consult with the industry on the changes would be overridden by the act’s recognition that lack of consultation would not nullify legislative instruments made by the Standards Body.
- The Standards Body board could be filled with the “usual suspects” with ingrained partisan positions.
Graham further reiterated fears that the act would entrench existing interests rather than improve adviser capability.
“Unfortunately, we may have limited capacity to influence the Standards Body but we do have both the opportunity and obligation to shape the future of continuing professional development,” Graham said.