Synchron questions motives of FSC whitepaper

Although it supports many of the recommendations, Synchron has questioned the motives of the Financial Services Council (FSC) white paper as it views the organisation responsible for the impact of the life insurance framework (LIF).

The FSC released the ‘White Paper on Financial Advice’ earlier this week which outlined a blueprint for a simplified regulatory environment and a 37% reduction in the cost of advice.

Don Trapnell, Synchron director, said: “We would obviously support moves by any industry body, association, or group of advisers that would reduce the cost of advice for consumers, relieve the compliance burden on financial advisers and simplify the industry’s regulatory framework”.

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Trapnell said many of the FSC’s recommendations made sense – including calls to abolish the safe harbour steps of the best interests duty, to trade statements of advice for consumer-focused ‘letters of advice’, to break the nexus between financial product and advice, and to afford greater recognition of prior learning.

“However, and this is perhaps more of a problem than the FSC is willing to recognise, the question on the lips of many risk advisers is – why should we trust the FSC?” Trapnell said.

Trapnell said risk advisers had not forgiven nor forgotten the LIF, which dramatically and negatively impacted their businesses, and held the FSC largely responsible for it.

“We still believe LIF was predicated on a lie, a lie that a culture of churn existed amongst advisers when there was scant evidence of it,” Trapnell said.

“It was championed by the FSC whose members, to this day, are primarily fund managers, superannuation funds and life insurers. Advisers are right to question the FSC’s motives.”

 Trapnell expressed disappointment that the white paper did not recognise the need to separate risk advisers from financial planners, especially in relation to education and training.

“Specialist risk advisers provide different services to financial planners,” he said.

“It doesn’t make sense for them to hold the same qualifications or have to commit to the same educational program.”

Trapnell said that even the Shadow Minister for Financial Services and Superannuation, Stephen Jones, MP had recently recognised this point.

Speaking at the Association of Financial Advisers (AFA) Evolve Conference last month, Jones said the Financial Adviser Standards and Ethics Authority (FASEA) should have recognised that not all advisers need to know every part of the qualification.

“We don’t need life advisers being trained in stockbroking, it is not essential to their job, in the same way that stockbrokers don’t need to know about life insurance,” Jones said.

“Yes, you are going to have different specialisations and people with a foot in more than one camp, but setting up an industry qualification that reflects the way the industry works would be a good starting point.”

The whitepaper had seen support from the Financial Planning Association of Australia and The Advisers Association.




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Don, and I don't know him and not part of his dealer group, seems to consistently make correct assessments around advice, in my view.

Spot.On.

Beware greeks bearing gifts. I think we are still reeling from the last one from the FSC. The FSC is at best advice adjacent, they cannot be trusted, do not have the right incentives, nor the ethical history to be taken seriously with respect to issues regarding financial advice.

yep, if I know the FSC well they want to give it to me. up the rear end.

Spot on Don. I'm not sure how much more it will take for the FSC to just admit they got it wrong with the LIF and were corrupt in the way it was orchestrated. So what if come of the "leaders" have to fall on their swords (they deserve too). Better that the entire risk industry collapsing which is where its headed.

So the AFA & FPA are selling us out yet again.

The LIF reforms were perpetrated on a LIE, which the FSC supported, and then the FPA & AFA told their members that the reforms will be good for the industry. The FSC don't want Financial Advisers dealing with the consumers, they want the consumers to deal direct with their "Call Centres" and the "White Paper" is just another "CON JOB". The Hayne Royal Commission put the knife in further and yet again, the FSC, FPA & AFA supported the "reforms" from that hatch it job. FASEA has been a joke from day one, and meanwhile Advisers are leaving in droves. The numbers will be below 15,000 by the end of 2021 and probably as low as 5,000 in 2026 when the next phase of the education requirements kick in. [ and before you have a go at me, I have passed the FASEA exam and half way through the Grad Dip so I will be one of the remaining advisers ].

Insurance new business is plummeting down over 200% since LIF reforms began [ is that not telling you something ], and now the insurance companies are starting to feel the pain with many reducing their staffing levels which then effects their service levels, so the downward spiral continues.

The new FDS rules are an overkill, with most clients wondering why are they having to sign endless reams of paper which all tell them the same thing. Yes I agree that clients need to know what they are being charged and what services they are receiving for the fees that they pay, but one for the Licensee, one for the platform and one for the Investment manager is a joke, and then to be told that they have to sign the same thing every year on the same date, they are just bewildered by the duplication and overkill.

Well done Don Trapnell [Synchron] and Peter Johnston [AIOFP] for speaking out and all advisers need to add their name to the petition that Peter has arranged, if we don't then the government [ with the help of the FSC, AFA & FPA ] will continue to shaft us.

I've never met Don, really wish I had, only read about him on pages like this and his general highly respected industry reputation. Again, he's written another article that screams accurately all of our thoughts about this Farce our industry has become. I'm leaving after 36 years as a Riskie, for all the reasons we all speak about and know about. However, perhaps one thing could have kept me from leaving - the risk/investment qualifications separation, as Don so clearly writes:-

QUOTE: " Trapnell expressed disappointment that the white paper did not recognise the need to separate risk advisers from financial planners, especially in relation to education and training.

“Specialist risk advisers provide different services to financial planners,” he said.

“It doesn’t make sense for them to hold the same qualifications or have to commit to the same educational program.”

(WHY DIDN'T THE LIFE OFFICES PUSH AND SUPPORT US IN THIS SEPARATION OF RISK/INVESTMENT QUALIFICATIONS!!?? - IT WOULD HAVE SAVED US AND THEM BY KEEPING EXPERIENCED RISKIES LIKE ME!)
THANKS DON FOR ALL YOUR INDUSTRY SUPPORT.

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