The Federal Government should resist the temptation to impose further regulation on the financial services industry, according to Queensland-based investment house, QInvest.
In a submission to the Joint Parliamentary Committee on Corporations and Financial Services, QInvest argues that “the number and spectacular nature of the collapses of financial services institutions since the introduction of the Financial Services Reforms only serves to highlight the fact that increased regulation is not the answer to our current problems”.
Looking at the question of fees and commissions, the submission said there was nothing inherently wrong with commission-based remuneration provided there had been full and frank disclosure to clients.
“The practical reality, evidenced by the matters under the inquiry’s terms of reference, is that such arrangements create a conflict of interest for financial advisers. In practice and regardless of the success of those who have managed them, they have proven to be very difficult for many to effectively (and honestly) manage,” it said.
“It is indeed a truism that ‘no man can serve two masters’, and this is more so in the financial planning industry,” the submission said.
It said that, as an industry, financial advisers were at a cross-road “and each of us needs to honestly decide: Who is our master: the client or the product issuer?”
“Experience has shown us that attempting to serve both, places the financial planner in an untenable position,” the submission said.
“It is only by fully embracing the fiduciary obligation of placing the client’s interests first – which is the very essence of being a professional – that financial planners will be recognised as true professionals.”
