The misconduct exposed within the bones of our financial services sector has cut trust and confidence to the lowest of levels and has probably pushed the backs of our lawmakers and regulators against the wall.
The Australian community, along with the tight-knit financial services community, who generally do a fine job for their clients under existing business models, are understandably angry at the institutionalised misconduct that continues to be exposed at the highest corporate levels.
Amid the most recent proceedings of the Royal Commission you could be excused for thinking the bad news would never end, but perhaps the reforms that will follow, even before the final report by Hayne in February next year, will bring new opportunity and breathe new life into an outdated business model.
While the Royal Commission has certainly exposed misconduct, I think it has also clearly pointed to the reforms the industry needs and will mostly get. Reform that protects, reform that fosters innovation and reform that ultimately gives more consumers access to good advice and value for service.
The findings from the Royal Commission, unity of purpose from the Parliament, and the emboldened regulator, will change the face of advice and financial products forever and for the better.
The Royal Commission has highlighted the need for financial services firms to separate product from advice, but more importantly to be an advocate for the financial well-being of their clients above all else. Products need to be secondary. Firms that take this approach and truly place clients at the centre of all they do will come out on top.
The once-in-a-lifetime alignment of recent events will enable change that was previously not possible and define the direction for a new, more professional financial services sector. The reforms of the past were just practice runs for the real game now taking place.
In a post FoFA, Royal Commission and Productivity Commission review world, surely the big financial institutions, banks, credit unions, insurance companies, super funds, and advisers, have seen the flashing red lights around advice and product sales?
Perhaps some still think they have plenty of time to adjust but the smart ones are already rolling up their sleeves and changing their models to meet the new regime.
The fact that the number of Australians paying for advice has been stubbornly stuck at about 20 per cent for the last 30 years should be enough encouragement for those who are willing to do things differently.
Ensuring more Australians can afford more access to much-needed quality advice free of product sales conflicts should now be the priority. Black-letter law will only lead the industry so far. A mind shift at the top of the corporate tree is still required if we all want the same two things: quality affordable advice and a professional, trusted financial services sector.
The planets have aligned, it’s now up to us to make it happen.
Bernie Ripoll is a former Labor parliamentarian and is now a director of fintech firm, Map My Plan.