The Australian insurance industry has been allowed to "morph" itself into the financial advice profession as the Australian financial system itself has been blind-sided by hidden agendas, according to mid-tier accounting and advice firm, Chan and Naylor.
The firm has used its second submission to the Financial Systems Inquiry (FSI) to criticise both the financial planning and accountancy professions, arguing that both have been guilty of failure.
"Regrettably when it comes to providing excellence in client advice both the financial services and accounting industries have, in Chan and Naylor's opinion, ‘missed the boat'," the submission said.
It said the financial planning industry had been closely scrutinised and even penalised over the years, whilst the accounting profession had "simply failed to step up to the plate, which is troubling given that accountants enjoy one of the closest and most trusted of client relationships of any profession".
"And whilst the financial services industry has arguably been too forward looking, the accounting
industry has been too backwards looking," the submission said. "Meanwhile the insurance sector has been allowed to morph itself into the financial advice profession as the Australian financial system itself has been blind-sided by hidden agendas, conflicted interests and ineffectual financial literacy standards."
The submission claimed that until these discrepancies were resolved it was the consumer who would bear the brunt of an industry shortfall.
"Put simply, the financial sector has dropped its duty of care to Australian consumers," it said.
The submission then argued that the FSI process had provided an opportunity to restore the fiduciary client relationship.
"Whilst the Government's proposed Future of Financial Advice (FoFA) regulations will be retained following the recent failure of a disallowance motion in the Senate, Chan and Naylor is calling on all parties with influence to consult with the wider industry ahead of further near term changes in order to fix the broken regulation before long term harm is done to both the financial advisory industry and consumers," it said.
"If FoFA passes to law in its current iteration this will lead to a number of perturbing outcomes including increased red tape, further consumer confusion and, as the cost of providing financial advice gets inevitably more expensive; the provision of quality advice will become further removed from ordinary Australians who need it most. This will mask the real issues and leave people vulnerable in believing their best interests are being taken care of," the submission said.
