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As the election campaign heats up, the Opposition is positioning itself as the defender of the interests of small-business financial advisers amid regulatory upheaval – but is yet to outline how it plans to achieve this objective.
The Opposition is placing a strong emphasis on its commitment to work with the financial advice industry in implementing reform, should it be re-elected.
The Coalition has said it is particularly concerned about the impact that the Gillard Government’s proposed Future of Financial Advice reforms will have on small-business financial planners.
“The Coalition is very mindful of the impact of these changes on small-business advisers – I think that’s a key difference between us and the Government,” Shadow Minister for Financial Services Luke Hartsuyker said.
“The Government has basically said there is a risk that people will be forced out of the industry and so forth. We see that as a party that represents the interests of small business as well as the interests of retirees, quite clearly, that we need to be mindful of those impacts on that industry.”
How it intends to overcome those problems is unclear, with the Coalition yet to release its blueprint for the financial advice industry.
Hartsuyker said the Coalition would be “releasing a range of policies in due course”.
In the meantime, he said the Coalition did not support a “blanket ban” on commissions. It does, however, want to see trailing commissions eradicated and has indicated it would like to see other “unfair methods of payment” taken out of the industry, as well as the introduction of more disclosure.
The Coalition has also said its supports industry self-regulation, including the moves already taken by industry bodies to reform the payments made to advisers.
Hartsuyker outlined some of the Coalition’s positions earlier this year in his response to the Ripoll Report.
He made clear he did not have a problem with commissions “where the fee is genuinely for advice received and can be linked directly to that advice”.
“In my opinion, a commission needs to be directly linked to the advice provided. There needs to be a sunset clause on the commission and the investor needs to have the opportunity to switch the commission off when advice ends,” Hartsuyker said.
He also questioned the need for a statutory fiduciary duty for advisers to be introduced, as recommended in the Ripoll Report and later supported by the Minister for Financial Services, Chris Bowen.
Hartsuyker said there were “a number of legal precedents which say that financial advisers already have a fiduciary obligation to their clients”, and as such he felt the introduction of such a measure was not “absolutely necessary”.
