The introduction of the Financial Services and Credit Panel (FSCP) needs to be sure that any “eligible person” appointed to the panel has the experience to ensure consideration of the correct context of the advice in question, according to the Association of Independently Owned Financial Professionals (AIOFP).
This was in preference over someone that was not just an expert in a particular subject, in a submission to Parliament on the Financial Sector Reform (Hayne Royal Commission Response – Better advice) Bill 2021.
It said any penalties set that may be imposed by the panel should have a sufficient range and type that allowed any sanction to be appropriate to the level of severity of the action that was being investigated.
It also said the issue of product failure should be recognised of the product issuer, not advisers, assuming all reasonable due diligence was carried out.
Research houses and the Australian Securities Investments Commission (ASIC) should also take responsibility for the issue of documents such as product profiles and product disclosure statements of product providers.
It also wanted the role of the licensee in providing administration and compliance assistance to be recognised and utilised to assist in reducing compliance costs that were ultimately passed on to clients.
The streamlined regulatory function should also not lose the current expertise required to support a major transition period in the industry, while also recognising the way advice services were delivered.
Peter Johnston, AIOFP executive director, said while the association understood aspects of the Royal Commission needed to be implemented it had some concerns in terms of how this was proposed.
“We believe that the consequences can be increased costs for advice (which will ultimately be passed onto consumers) and inadequate expertise in pertinent areas at a time of significant change in our industry,” Johnston said.
Johnston said a concern the association had was that such changes would be the catalyst for an increase in compliance costs, which would only increase the cost of advice to the consumer.
“Further, we hold the concern that consultation on implementation measures needs to be across a wide demographic of financial advice business – not simply those from the top end of town’,” Johnston said.
“This way the implementation would truly represent the interests of all client types, and not simply the wealthy.
“We would like to offer our assistance in providing access to members who represent this wide range of client interests for any consultation or implementation.”