The Association of Independently Owned Financial Professionals (AIOFP) has shared insights from its meeting with the Treasury regarding the Quality of Advice Review (QAR).
The meeting was attended by the AIOFP’s non-executive director, Garry Crole, technical adviser Lionel Rodrigues and executive director, Peter Johnston, along with five members of the Treasury who were working on the review.
“We are very pleased to say that the team is genuinely pragmatic and open minded with their approach to this critical point in our industry’s history. This is in stark contrast to the previous government’s approach, where they had already decided on their direction/agenda before meeting with stakeholders.”
The group noted that Canberra was “dubious” about the multitude of different associations representing the financial advice community.
“A critical issue that needs addressing is the confusion and bewilderment in Canberra with the number of different associations supposedly representing the advice community. Politicians and bureaucrats are justifiably dubious of this malaise, but we argue that Canberra must initiate some due diligence and take responsibility for who they are actually dealing with.
“This meeting experience has positively reinforced the judicious direction Minister Jones has taken with a truly industry-wide consultative process, critically including industry practitioners in the process. We congratulate the Minister and his advisers on this approach.”
Unlike other associations, the AIOFP was against the implementation of the QAR in its current format, arguing that the review was incorrectly worded and politically motivated. It also felt the current compliance regime was no longer fit for purpose now that the banks had left the advice arena, and this had driven up costs for clients.
Finally, it felt the Review’s proposals to dilute consumer protection with a “good advice” concept to replace best interests duty would leave consumers exposed to poor advice and vulnerable situations.
“We consider this as an effort to let the banks back into advice with minimal legal obligations at the peril of consumers, an appalling and unconscionable situation for any stakeholder to contemplate in our view.”
In light of this, the AIOFP was strongly against the banks returning to financial advice, despite the need to improve advice accessibility, as their previous activities had led to the Hayne Royal Commission.
“We contend that recent history clearly demonstrates that banks are not very good at advice or wealth management; we respectfully suggest they should just stay with standard banking practices.
“We acknowledge that both banks and super funds need a solution to their dilemma of large consumer bases to service, but giving them a consumer protection weakened, highly conflicted vertical integration outcome is not the answer.
“Vertical integration is a profoundly conflicted anti-consumer environment that has been the scourge of the industry for the past 30 years and should be consigned to history. Banks and super funds should be permitted to have internal staff giving clients factual product information to consumers, nothing more.”
There should be no way that Vertical Integration should be possible. Having product and advice in-house is a conflict of interest – there’s no way to argue otherwise.
I really like the stance taken by the AIOFP on this particular point. Factual information – no such thing as general advice – is the only way to go.
So is the AIOFP becoming the only body representing the adviser? I note that FA in FAAA stands for Financial Advice, not Financial Adviser or Planner. They couldn’t be more clear where the merged body will focus its energy, and it won’t be us.
Really Peter??? We’ve lost count of how many AIOFP directors and members have been banned now!