Insto planners to avoid fiduciary duty
The Government has established framework that would allow statutory fiduciary duty to be circumvented by some financial planners, while promoting this reform to be meaningful and worthwhile, according to the Boutique Financial Planning Principals Group (BFPPG).
This statement, written by chief Claude Santucci (pictured), came as part of the group’s response to the recently released Future of Financial Advice (FOFA) information pack, in which the Government officially announced the anticipated changes, including the introduction of a statutory fiduciary duty.
The information pack included a paragraph indicating an adviser would not be required to “broker the entire market … to find the best possible product for the client, unless this service is offered by the adviser or requested by the client and agreed to by both parties”.
Referring to the paragraph, Santucci questioned whether it meant to limit the requirement to acting in the client’s best interest ‘within an institution’s limitation’.
“How will consumers be made aware that the advice may be limited by an adviser’s inability to consider alternatives that may include going outside the institution?” Santucci asked.
Santucci claimed the reform would not improve the quality of advice unless the conflict between acting in a client’s best interest and the best interest of the Australian Financial Services Licence holder is resolved.
The BFPPG launched a further attack on institutions while addressing the ban on volume rebates, by proposing a complimentary reform: a ban on cross subsidies from institutions to their advice arms.
“The two very separate activities of product manufacture and distribution, and the provision of advice must be kept apart,” Santucci wrote.
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