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The chairman of the parliamentary inquiry into the financial services industry believes the critical issue that has emerged is the quality of financial advice provided, rather than how consumers pay for that advice.
Speaking on the ABC’s Inside Business program yesterday, Bernie Ripoll said the quality of financial advice takes precedence over the remuneration structure of the advice.
He said the payment links between product manufacturers, sales people, advisers and clients are “exceptionally important”.
“But in the end the quality of advice is what’s critical, not so much how much you pay for that advice.”
The joint committee will make recommendations regarding fee structures in its report to be handed down later this month.
He said what “happens in the future is a matter for government” in terms of making any legislative changes.
Ripoll said while “of course” there would be changes to the financial services industry as a result of either his inquiry or broader Government changes, he was “not sure if you’d call them radical”.
The Labor MP also said there are issues with the current licensing regime, saying it was important that “people better understand that the mere fact of holding an [Australian Financial Services Licence] doesn’t mean that the model or the advice they give is approved”.
Ripoll said the committee was considering suggestions around more accurate descriptors for providers of financial advice, but did point out the use of the term ‘accountant’ is not regulated.
“I think the important question here is not so much what you call yourself, because that in itself can be quite confusing, but the quality of advice you provide, the advice that you’re entitled to provide, and to ensure that it’s appropriate and tailored individually for that particular person you’re advising. I think that’s the key here rather than just what somebody calls themselves.”
