Financial advisers have too often been the subject the misattribution of blame for product failures or the activities of people who were not, in fact, authorised or licensed to provide financial advice, including accountants, according to the Association Financial Advisers (AFA).
The AFA has used its submission to the Senate Economics Legislation Committee inquiry into the Scrutiny of Financial Advice to claim that, too often, product failure had been confused with advice failure.
"Many of the significant consumer loss cases have involved product failure and frequently the resultant losses suffered are incorrectly attributed to financial advice and/or financial advisers," it said. "It is important to note that product failure should not be confused with advice failure."
The submission said that in a similar situation of misattribution, there had been numerous examples of advice failure from individuals that have not been authorised or licensed to provide financial advice, "yet their failings have been termed financial adviser failings by the regulator and the media".
"This includes situations where accountants have been the advice provider without being authorised to provide such advice," it said. "The wrongdoings in these situations should not be laid at the feet of financial advisers."
The submission also argued that in the vast majority of cases of poor financial adviser behaviour, the behaviour had been outside the boundary of the laws that applied at the time that the event occurred.
It said that changing the law was unlikely to impact the behaviour of people who were determined to operate outside the law but added that it was important to "put in place mechanisms and measures to ensure that these people are identified and removed from the financial advice market place."
"Additionally, further steps to prevent those likely to act outside the law from attaining an authority to advise, or to transfer between licensees, should be implemented," the submission said.