The Financial Planning Association (FPA) believes the results of the Australian Securities and Investments Commission’s (ASIC) most recent shadow shopping survey reflect a financial planning profession in a healthy state, and is confident it has the procedures in place already to further boost the standards of the financial advisory industry.
“We believe this is a very positive report for financial planners, particularly for consumers in terms of the confidence that they can have in the advice that they receive in the superannuation area,” FPA chair Corinna Dieters said.
The study found 80 per cent of advice issued regarding switching superannuation funds was reasonable in terms of the client’s needs and circumstances.
“That’s very pleasing considering we’ve come off the introduction of Super Choice,” Dieters said.
Conflicts of interest were highlighted as a continuing problem area, with the survey revealing unreasonable advice was three to six times more likely where conflicts were present.
While the FPA indicated it wanted to further investigate the statistics on this subject, it was confident it already had the framework in place to improve the situation.
“With our recent release of the conflicts of interest principles, some of the points that have been made in the report about the disclosure of conflicts are exactly what the principles were introduced to address,” Dieters said.
The association thought the finding that advisers had failed to provide a written Statement of Advice in 46 per cent of cases emphasised the need for legislative refinement in regard to the definition of general advice and materiality.
However, Dieters reinforced the need for members to fulfil their legal obligations during the refinement process.
“We’ve always supported the need for our members to ensure they meet the requirements of FSR [Financial Services Reform]. Even when we knew changes were coming through … our position has always been that, until the refinements come through, it is important our members meet the requirements of the law,” Dieters said.
Members that breach FPA conflicts guidelines face a $20,000 fine and expulsion from the association.
