In the wake of recent disasters in the financial services industry, such as Westpoint, Storm and the global financial crisis, tighter regulation of the sector, including financial planners, was required.
This was the opinion of former High Court judge, the Hon. Sir Anthony Mason, who, as patron of the Self-Managed Super Fund Professionals’ Association of Australia (SPAA), told delegates at its national conference in Adelaide yesterday of the need for greater professionalism within the financial services industry.
Mason said confidence in the industry had been dented as a result of these disasters and immediate steps were needed to protect investors.
Mason was highly critical of financial planners, saying one of the greatest conflicts within the industry is the tied adviser who was “selling products” to clients.
“Some product sellers are trying to disguise this fact by claiming to be a licensed adviser,” he said.
Mason said it was essential that a ‘client-first principle’ be implemented across the industry, and was supportive of the efforts by the Financial Planning Association to begin the journey down this path. However, he questioned why the industry had not adopted this fundamental approach to advice a long time ago.
Mason was not only critical of commission payments compared to fee-for-service, but also urged restraint on the excessive remuneration being paid by banks and fund managers within the industry. This was all the more necessary in times like the present, when investor returns were in decline.
He agreed it would be difficult to impose some restraint on excessive remuneration and suggested taxation as a possible route the Government might consider to curb the payment of inflated bonuses and incentives.
“Obviously, some form of preventable monitoring is to be preferred to punitive measures,” Mason said.
