Planners to be rated on quality of advice
Adviser Ratings has responded to the Royal Commission by establishing a new financial adviser rating system, which would be overseen by industry heavyweights, including former Australian Securities and Investments Commission (ASIC) chair, Peter Kell, and former Financial Adviser Standards and Ethics Authority chief executive, Deen Sanders.
The rating system, to be launched later this year, would focus on quality of advice. It would provide information to consumers, advisers, industry regulators, and product developers, with Adviser Ratings noting that the latter would have a greater shared responsibility with advice channels once the Design and Distribution Obligations and Product Intervention Powers Bill currently before Parliament pass.
Kell would sit on an external ratings committee (ERC) that would ensure the rating system was managed according to a reputable governance regime. Other members would be Jerry Parwada, professor of finance at UNSW Business School, Paul Coughlin, former global head of credit ratings at S&P, and Janice Sengupta, former Aon, Asia Pacific chief investment officer.
The ERC would be supported by an external panel, which Adviser Ratings said “may grow over time as evolution of the sector demands new specialist experience”.
In addition to Sanders, who was now a partner at Deloitte, the panel would include Tom Reddaliff, Encore Advisory Group director and chief executive, and Michelle Cull of Western Sydney University’s School of Business.
“The Royal Commission advocates for increased information disclosure however the challenge for consumers is processing this deluge of information. This necessitates a carefully thought out and regularly updated summary measure of quality,” Parwada, who would be the ERC chair, said.
“A key differentiator of the proposed rating methodology is that it will be backed up by a standing research capability designed to stress test the factors predicted to influence quality of advice as well as keep track of changing dynamics in the industry.”
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