AXA defends planning in super

The large financial services group, AXA, has defended the role of financial planners in the superannuation arena along with the on-going existence of vertically integrated financial services conglomerates.

But in its submission to the Cooper Review, AXA has argued for the approach being developed by the United Kingdom’s Financial Services Authority (FSA) to be considered. The FSA seeks to define advisers as ‘independent’ or ‘restricted’.

“We consider that improving disclosure, professionalism and standards in the industry is a better alternative to simply imposing some form of ‘best advice’ or fiduciary obligation on advisers through regulatory change,” the AXA submission said. “This is the approach put forward by the FSA in the United Kingdom, which is proposing a number of changes to the provision of financial advice.”

It said the FSA proposals included:

• separating advisers into ‘independent’ and ‘restricted’ categories and requiring disclosure of adviser status

• explicit charging for advice rather than commissions embedded in other fees, and

• the establishment of a professional services board to set minimum education and accreditation requirements, and monitor and enforce these standards.

Defending the role of vertically integrated financial services conglomerates, the AXA submission claimed that clients might choose to use large organisations like AXA “for reasons other than cost and/or short-term performance including brand, trust, reliability, financial backing, previous relationships, and the provision and quality of ancillary services”.

“They may choose to receive advice from and invest with the one large organisation that they know has the financial strength and willingness to ensure they have the right processes in place,” the submission said.

It added that vertically integrated financial services conglomerates were an essential part of the highly competitive Australian market, because the operational efficiencies gained through vertically integrated models led to cost reductions and also provided Australians with choice.