Associations clash over risk disclosure
A WAR of words has begun between three industry bodies over disclosure of commissions on risk products and the viability of the Financial Services Reform Act (FSRA).
The clash comes after theFinancial Planning Association(FPA) and theInvestment and Financial Services Association(IFSA) entered a joint submission to the Parliamentary Joint Committee on Corporations and Financial Services, opposing a disclosure exemption for risk products.
TheAssociation of Financial Advisers(AFA) also recently entered a submission to the committee, taking the opposite stance that disclosure on risk products is irrelevant and confusing to consumers.
IFSA chief executive Richard Gilbert says a possible exemption would be “going backwards to secret commission territory”.
“Suffice to say, we are disappointed the committee has seen a way to re-open an issue we thought was settled,” he says.
FPA chief executive Ken Breakspear agrees that all fees and commissions should be disclosed to consumers, regardless of the product being sold.
“Our view is that we do not want to undermine the universal principles of the FSRA,” Breakspear says.
The comments were made when the FPA and IFSA came together to announce continued support for the principles of the FSRA.
AFA national president Robyn Yates has responded by labelling the FSRA “a load of junk”.
Yates says disclosure on risk products does not help, and is in fact detrimental to both the consumer and small business.
“Given that consumer knowledge of commissions makes no difference to the premium paid out [on risk products], there is no reason for disclosure,” Yates says.
The joint FPA/IFSA submission to the committee calls for the strengthening of disclosure requirements in theFinancial Services GuideandStatement of Advice.
IFSA is also developing a new standard Product Disclosure Statement for use by its members.
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