Get tough policy on adviser conflicts

Financial planners are expected to get the first glimpse at the latest get tough approach to policing the profession this week, with the Financial Planning Association (FPA) scheduled to release preliminary details of its long-awaited guidelines on managing conflicts of interest.

The new guidelines, which will be discussed at the FPA’s National Principals’ Forum in Sydney this week, are the third in a series of policies by the association to combat growing consumer and regulatory criticism of advisers.

It is understood the guidelines will not take a prescriptive approach and ban practices that create conflict of interest for financial planners.

Instead, it is believed the guidelines will outline a set of broad principles against which perceived conflicts of interest in the financial planning profession, including ownership structures for advice groups, will be judged by the FPA.

A taskforce, which is understood to include representatives from some of the country’s biggest dealer groups, including Count Financial and the Commonwealth Bank of Australia network, as well as representatives from the Boutique Financial Planning Principals Group, has been consulting with the FPA over the guidelines.

FPA chief executive Kerrie Kelly told Money Management last week the guidelines were still being fine-tuned ahead of the Principals’ Forum.

“As part of the FPA’s overall ongoing work on improving payment and remuneration practices, a taskforce has been meeting to discuss perceived conflicts of interest and how these should be dealt with,” Kelly says.

The conflict of interest guidelines are the final piece of the FPA’s reform process to improve the standing of the financial planning profession.

In August, the association, in conjunction with the Investment and Financial Services Association, released its reforms for soft dollar remuneration, which will see financial planners banned from accepting a range of alternative remuneration payments, including free travel and accommodation that are volume sales related.

A month later, the two associations released a second wave of reforms requiring financial planners who use investment platforms to commit to a tougher disclosure regime.

“After [the National Principals’ Forum], further feedback will be considered by the taskforce,” Kelly says.