Predictions of significant reductions in the number of financial advisers contained in the Government's Future of Financial Advice (FOFA) bills combined with the general drift around the legislative package had served to create anxiety and uncertainty among financial advisers.
That is the assessment of the Association of Financial Advisers (AFA) contained in its submission to the Parliamentary Joint Committee reviewing the FOFA bills.
What is more, the AFA submission has warned that if the reduction of over 40 per cent of financial advisers were to eventuate, it would "decimate" the industry.
"Such an outcome would result in a significant reduction in the number of consumers receiving financial advice, which would have seriously detrimental impacts upon the country as a whole," it said.
The submission said that in addition, the downstream impact of a reduction of 6,800 financial advisers "has a multiplier effect of at least five, given the staff the average practice employs and other related suppliers".
The AFA submission said the FOFA changes had lost direction, and this was clearly indicated by the manner in which it had drifted away from the original recommendations of the Parliamentary Joint Committee and towards factors such as opt-in, annual fee disclosure and the changes to arrangements on insurance commissions inside superannuation.
The AFA said the Government had also failed to provide an explanation of why introduction of the FOFA legislation had been split into separate tranches – something which had served to undermine faith in the process.
The submission also claimed that consumers had emerged as the missing piece and the real issue with the focus of FOFA having become mired in a range of technical issues.
It said the debate needed to be re-centered on the key issues facing consumers:
- How do we ensure more people seek financial advice?
- How do we ensure that the financial advice provided is transparent, robust and in the best interests of the clients?
