The financial services industry has, in the past, had too much influence over the Liberal Party and industry superannuation funds have too much influence over the Labor Party today, according to NSW Liberal Party Senator, Andrew Bragg.
In doing so, Bragg conceded that Liberal politicians had been wrong to resist the Future of Financial Advice (FoFA) changes and the calling of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Participating in an online debate sponsored by the Association of Superannuation Funds of Australia (ASFA), Bragg sought to defend his position on superannuation by claiming that it was independently arrived at and was not the product of external influences.
In doing so, Bragg suggested that the Australian Labor Party (ALP) was wrong in defending the manner in which industry superannuation funds had been prepared to fund media outlets such as The New Daily and advertising campaigns undertaken by Industry Super Australia (ISA).
He claimed such funding represented a breach of the sole purpose test.
Bragg was participating in the ASFA debate facing Australian Labor Party backbencher, Dr Daniel Mulino.
Comments
I am unconvinced that Andrew Bragg is doing anyone in this industry any good whatsoever.
He certainly didn't assist advisers in any way whatsoever during his time at the FSC.
IF he is correct, then tell me who designed LIF. Who first funded FASEA. Why does the FSC, his former employer, refuse to acknowledge ADVISERS are an equally important component in the delivery of advice.
He is correct on the abuses in the ISN, but he should also look at the insurance component of ISN super
The problem with FOFA is that Liberals wanted to put in place something, anything, that Bill Shorten wouldn't overturn in Government in his forecast endeavors to protect the ISN funds.. The result - total overkill in compliance.
And the Libs apparently are not keen to restrain ASIC, which MUST be a regulator, not a policy maker
At least Tim Wilson MP is kicking butt on intrafund. Bragg is deathly silent about it. Bragg needs to nail his colours to the mast on the intrafund racket. He seems quite happy to do so on virtually every other topic.
I would doubt that this idiot is speaking on behalf of all the Coalition. He obviosuly has no idea on how much regulation the Financial Services Industry and especially planners have to endure because of Shifty Shorten and Brainless Bowen who pushed through the FOFA changes to protect their mates at ISF and ISA. I have far more respect for Tim Wilson and how he is prosecuting the case against ISF which Hayne never even question in the RC. It was only ever about attacking the retail funds and financial planners. If Bragg can't make any constructive comments then he needs to keep his mouth shut.
On the 5th Feb, 2015, Andrew Bragg ( then, Director of Policy and Global Markets) at the FSC signed off on a one page letter to John Trowbridge introducing the FSC's 11 page submission to the Trowbridge Review of Retail Life Insurance Advice.
The letter he signed was fully supportive of Trowbridge and the FSC's submission was focused very heavily on the significant reduction or removal of commissions and as a result of these recommendations claiming " improving the quality of advice consumers receive" and " reducing under insurance in Australia by increasing the AFFORDABILITY AND ACCESSIBILITY of retail life insurance " .
Then, under the heading of "Reviewing the application of this model by 2020", the FSC submission then stated:
" Any proposed model that is implemented should be reviewed by 2020 in order to assess its effectiveness.
If the model fails to improve consumer outcomes, further action should be taken to adjust remuneration models so that they do not misalign incentives in the retail life insurance advice value chain".
Well Andrew Bragg, the organisation you previously represented must now address the train wreck that is now the Life Insurance industry.
It has failed not only the consumer in regard to affordability and access to advice, it has failed in regard to addressing the under insurance issues.
Insurance premiums have skyrocketed, claims expenses have skyrocketed, the number of advisers is falling quickly and will not be replaced and therefore the level of new business volumes needed to offset the claims expenses and to assist in maintaining premiums is non existent.
This has been an abject failure on a grand scale and driven by misaligned incentives, ideology and greed.
I want Andrew Bragg to be interviewed on this subject and lets see how he addresses the problems that this industry is now faced with.
In addition, in 2012 and 2013, the FSC made 2 donations directly to Kelly O'Dwyer's Higgins Electorate Conference....just a coincidence?
This is a disaster and it was facilitated and assisted by the FSC.
Exactly.
Bragg is correct. Product providers aligned with both sides of politics have had too much influence. This is ultimately why financial advice has been excessively regulated by both sides of politics.
Consumers now have to rely much more on advertising & PR to choose financial products. It is much harder for them to access professional financial advice. This is exactly what all product providers want. Whether they are "Industry" super funds aligned with Labor, or direct insurance and investment products aligned with Liberal, the principle is the same. Product providers can sell far more high margin, low quality, product when consumers are making poorly informed decisions based on advertising & PR.
Agreed.
Over the last 10 years plus, the commodification of both superannuation and life insurance has potentially devalued the advice process in the eyes of some consumers.
As a consequence, consumers are told they can make their own decisions and then go direct.
Often the decisions made are without adequate education and analysis and based on the influences of others around them, marketing spin and impulse buying behaviour initiated by advertising strategy that seeks to push a need for urgency.
The fact that the direct insurance business was exposed and highlighted the risks associated with this model, doesn't seem to have dulled the number or repetition of direct insurance advertisements on television.
They wouldn't be spending the big dollars if it wasn't successful.
The very latest range of advertisements for HESTA super fund finishes with the statement..." Change your super....Change the future", which is simply a blatant message advising the listener to transfer their current superannuation to HESTA.
This type of aggressive advertising grab sows the seed for someone to switch superannuation providers.
The only disclaimer they offer in minute print is for the viewer to " read the Product Disclosure Document and decide if it's right for you"....leaving the responsibility for a very important decision process up to the viewer to make an informed decision on their entire retirement strategy.
This is about product flogging, brand recognition and the triggering of uninformed and uneducated responses from consumers.
This is a case of these superannuation funds spending millions and millions of existing members monies simply to attract more members. The Sole Purpose Test appears to be ineffective in controlling Trustees determination to approve massive spending programs on promotion and marketing to a mass audience.
Agree with your line of thought.
Superannuation and pension funds whether retail or industry are big businesses and so act like big businesses. There is nothing wrong with businesses marketing and promoting their business and products and services. Time for the financial advice industry and its members to get over the issues that mean nothing to clients such as intrafund advice, the exams, the regulations, ASIC, the exodus of advisors (probably a good thing for remaining advisors), industry vs retail super debate and the rest.
Instead it is time for the financial advice industry and its members to do some marketing and promoting themselves. There's plenty to promote and advertise such as the value and worthiness of financial advice, the competency of financial advisors, qualifications now required, and good oversight of the trade. Time to get a professional body in place to set and maintain professional standards of financial advisors.
Fight advertising with advertising? What a ridiculous cop out. Advertising costs lots of money. That's OK for corporates with deep pockets, or for union funds who benefit from legislatively mandated inflows. But advisers don't have that sort of money. They have even less money when their businesses are being decimated by regulatory onslaught. The reason advisers complain about the issues you raise is because they are methods used by big corporates and unions (via their parliamentary puppets) to squash professionals capable of giving consumers impartial advice. It is anti consumer and a perversion of democracy.
Who needs enemies when you've got "friends" like some in the Liberal Party. Whether it's LIF, FASEA or the latest Royal Commission reforms, the Liberal Party are responsible for the regulatory tsunami that advisers have been trying to stay float on over the past 5yrs or so. FASEA is a mess and apparently not accountable to anybody. O'Dwyer is responsible for this mess, but she's long gone, along with her parliamentary pension.
Gee, we Advisers either have short memories or just DON'T get it. The FSC is the Association for the Financial Institutions, period - they are the enemy of ALL Advisers. The greatest perpetrator of harm against Advisers over the past 10 years has been another former FSC Executive called Martin Codina who also worked for BT. Codina is Frydenbergs personal Adviser on our industry - say no more. We now have former FSC Executive Bragg trying to now mix in Shorten/FOFA/Royal Commission into the political pie for guess what?....very likely Federal Election within 13 months. The Libs want us to start hating the ALP by trying to change the narrative, they have been the problem since November 2013 when our first Minister was guess who? - Frydenberg...say no more. It is the FSC who corralled the FPA and AFA to give O'Dywer the ammunition to implement FASEA/LIF result? The Life industry is on its knees, we are being brutalised by FASEA, the Insto are keeping our GF trails BUT the FPA has $17 million in the Bank to fund De Gori retirement plans. When are ALL ADVISERS going to wake up that paying your fees to Associations that don't politically support you is giving away your political capital to be used against you...a suggestion, forget the always questionable value of the CFP brand, consumers don't care.....
Why is the headline for this article written that way?
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