The Royal Commission should not go unchallenged – AFA

The Association of Financial Advisers (AFA) has directly questioned why many of the findings of the Royal Commission have been left to go unchallenged and is arguing that the Government risks being found guilty of over-reach by implementing the Commissioner’s recommendations without question.

In a message to AFA members, the organisation’s general manager, policy and professionalism, Phil Anderson used the six-month anniversary of the release of the Royal Commission’s findings to argue that financial advisers had been unfairly targeted and to question why the Government was driving “fundamental change at break-neck speed just because one person says so”.

In doing so, Anderson suggested the Government might actually be seeking to circumvent the law by encouraging large companies to breach their contracts with small businesses.

Further, Anderson argued that the Royal Commissioner, Kenneth Hayne veered from his terms of reference by not having regard to the implications of any changes to laws that he proposed, the economic outcome or the affordability and accessibility of financial advice.

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“There was little discussion about the implications of the financial advice recommendations. There was no discussion on the number of clients impacted, or the impact on the adviser population. There was no reference to the impact on accessibility or the cost of financial advice. 

“The implementation of these recommendations will put access to affordable advice at increasing risk for everyday Australians. This was demonstrated by a recent statement from the MLC advice business, that they, ‘will focus on affluent clients, not mass clients’,” Anderson wrote.

The AFA executive said the bottom line of having left the Royal Commission’s findings unchallenged was that big decisions had been made by Government, and more recently by large institutions, but that the impact had been felt greatest by thousands of self-employed advisers and the staff working in advice practices.

“The regulators have issued directives that will impact the ability for small business financial advice practices to charge ongoing fees from superannuation accounts,” he said. 

“The Government has moved to ban trail commissions in 16 months’ time. Groups like AMP have committed to removing it in less than half that time. This impacts clients who are exposed to the loss of access to advice in this short timeframe. The impact is hardest felt by those advisers who have recently bought businesses with trail commission clients, typically with borrowed funds. It will also have a big impact in regional and remote areas.

“Many advisers around the country are at the moment subject to horrendous stress. For the big institutions, offloading advice operations is just a matter of a rounding error. For some advisers it will mean losing their lifetime savings.”