Stop the rivers of gold

Australian financial planners should have a statutory financial duty to their clients, according to the principals of Quantum Financial Services, Tim and Claire Mackay.

The pair have told the Parliamentary Joint Committee on Corporations and Financial Services that not only should there be an explicit fiduciary duty imposed on financial planners, but that the “rivers of gold” represented by commissions should be turned off.

“No one would consider allowing lobby groups to pay fees to politicians, yet we allow product manufacturers to pay financial planners and dealer groups,” they said.

Explaining what they meant by “rivers of gold”, the two Mackays said they meant commissions and any other type of financial arrangement between product providers, platforms, dealer groups and advisers”.

Further, they said the only parties who were likely to resist such reform were those who financially benefited from the rivers of gold.

Their submission argued that there also needed to be a clear distinction between independent advisers and financial product sales people but no difference in the standard to which they were held, with both having a fiduciary duty to their client.

It also called for the establishment of a Professional Standards Board that was independent and self-funding, with compulsory membership that set high and uniform professional and ethical standards.