The Minister for Finance and Acting Assistant Treasurer, Senator Mathias Cormann has recently announced a plan to establish a public register of financial advisors in an attempt to protect consumers seeking financial advice.
Senator Cormann has said that an industry working group will consider “the scope and content of the register, including a record of each adviser?s credentials and status in the industry” and will provide its findings to Government by mid-August.
While the register will list names, license types and disqualifications, there has been no mention of noting the adviser?s independence, or lack thereof. This may be a notable oversight, because according to President of the Independent Financial Adviser?s Association, Daniel Brammall, “something like 85% of financial planners are affiliated in one way or another with a product manufacturer”, making it more likely that a financial planner will encounter a conflict of interest, and subsequently not act in their client?s best interest.
However the Association of Financial Advisers CEO Brad Fox has stated that “only people with appropriate qualifications, experience, and legal authority will be on the register. This will increase the protection available to customers.”
The announcement to establish the register comes not long after the news that the consumer protection elements of the Future of Financial Advice (FoFA) laws had been dismantled. Industry Super Australia Chief Executive David Whitley described the news as “disappointing” and stated that “once again consumers are left exposed.”
Whitley said that while the public register was a sound initiative, and that “any move to increase professionalism and transparency in the financial advice sector is good news for the Australians we represent,” he made it clear that “our determination to see the vital consumer protection elements of the FoFA laws will not wane.”
“It is very clear that the fine-print of the Government?s regulations substantially dilutes the best interest obligations from financial advisers, and legalises the payments of a variety of conflicted remuneration.”
However Financial Planning Association Chief Executive, Mark Rantall has fully endorsed the plan, stating that “an appropriate register will provide protection for consumers,” and that “the register will also help weed out bad apples and provide protection for licensees, employers, and ultimately the consumer.”
“When you go to a financial planner you have the right to know you can trust the person you choose.”