A structural flaw had allowed financial product manufacturers (banks, insurers and super funds) to "dress up" the provision of information regarding their products, and the selling of their products by employees, agents, or representatives of their licensees, as "advice", according to the Boutique Financial Planning Principals Group (BFP).
The BFP has made the claim at the same time as backing the Financial Planning Association's (FPA's) Future of Financial Advice (FOFA) 10 point plan and particularly the separation of product sales from advice.
The BFP executive, meeting on Friday, said it fully endorsed the 10 point plan, with its president, Wayne Roggero saying the organisation believed the plan not only contained the steps necessary to move forward as a profession but also to provide protection for Austrlaian consumers.
He said the BFP always believed that the FSR regime contained a structural flaw in allowing financial product manufacturers (banks, insurers and super funds) to "dress up" the provision of information regarding their products, and the selling of their products by employees, agents, or representatives of their licensees, as "advice".
"These financial institutions have continually used this "advice" as a "loss leader" to direct funds to, or retain funds in, their own financial products or platforms," Roggero said.
He said there had been numerous surveys released in recent years highlighting that consumers receiving advice through AFSLs owned by product manufacturers mistakenly thought they were dealing with "independent" advisers and the BFP had repeatedly called for clearer disclosure of the ultimate owner of an AFSL to allow consumers to make an informed choice.
Roggero said the BFP also supported the call for the introduction of an ASIC register for all Financial Planners which it believed would allow Licensees to be able to confirm the employment history of a Financial Planner, something which was currently difficult where a planner had been an employee representative.
He said that while the BFP maintained the FOFA reforms included important consumer protection measures, these had been overwhelmed by poor drafting and unnecessary regulation, and they failed to address the structural flaws in the financial services industry.
"As such, FOFA remains a work-in-progress requiring immediate remedial attention to reduce red tape, so that our members can continue to provide cost-effective advice to Australian consumers and small businesses," Roggero said.
