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”.
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.
