Don’t make us pay compensation for others’ failures – FSC
Members of the Financial Services Council (FSC) should not have to help underwrite a last resort compensation scheme in circumstances where they already stand behind their advisers and compensate clients when things go wrong.
A public hearing of the Senate Economics Committee inquiry into consumer protection in the banking, insurance and financial sector has been told by the FSC that its members do not believe they should be required to stand behind the poor advice of advisers they do not employ.
FSC senior policy adviser, Blake Briggs told South Australian Senator, Nick Xenophon that for the members the FSC covered, “we can say that they are well run institutions where their advisers clearly met a higher standard and the institution stood behind the advisers. When the advisers made mistakes or did the wrong thing, the institutions stood behind the advice that was given”.
He said he believed what Senator Xenophon was asking was: “can the costs of their [other adviser’s] poor advice be transferred onto other institutions that have higher standards for the advisers that they recruit?”
“Our guys go out, train their advisers better, stand behind the advice they give, and, if something goes wrong, cover it,” Briggs said. “They also have better ongoing systems and they have better adherence to the best duty in FOFA [Future of Financial Advice].”
“What you are now asking is: would we also stand behind the advisers that we do not employ?” he told the Senator.
Recommended for you
ASIC has called on superannuation funds to improve their oversight of advice fee deductions following an investigation of 10 trustees that found $990 million was charged in one year.
Financial services lawyers believe the government may have good intentions, but the proposed legislation leaves superannuation trustees targeting an unachievable “standard of perfection” when it comes to advice deductions.
Advisers could find themselves unable to receive the fair market price of their advice as the Delivering Better Financial Outcomes legislation states superannuation trustees can reject deductions that are not charged on a cost basis.
Two advice professionals have shared five key takeaways as to how advisers can strengthen their communication with clients, especially at review time, in order to build deeper relationships.
