Exclude super funds from institutional advice ‘forever ban’ says AIOFP
The major financial institutions such as banks “should be forever banned from offering professional advice to consumers” but superannuation funds should not be similarly banned, according to the Association of Independently Owned Financial Professionals (AIOFP).
The AIOFP executive director, Peter Johnston has written to Parliamentarians pointing to recent Supreme Court action against MLC/NAB Management over fees for no services claiming it as “yet another reminder of the past unacceptable conduct of Institutional Management and why they should never be allowed to participate in the financial advice space again”.
“It should also be noted that this blatant ‘extortion’ from Consumer savings was carried out by Institutional Management teams [NOT Financial Advisers] where they are paid generous bonuses for the profitability of their divisions, a clear conflict with the best interests of consumers and it can be argued it is just another form of product related commission which was banned under FOFA in 2012.”
“The irony of this unpalatable conduct are Consumers have been paying twice in the past, once to the Institutions for their deceit and then again with higher advice fees imposed post Royal Commission when Commissioner Hayne recommended additional compliance measures to counter this institutional conduct in his final Report. Ridiculous Consent forms and other repetitive and unnecessary paperwork has doubled the cost of compliance over the past 7 years and Consumers are paying for it,” Johnston’s letter said.
“The final insult and satiric circumstances for Consumers and Financial Advisers are most of these Institutions have now departed the Advice industry in disgrace, but the measures Comm Hayne put in place to curtail these Institutional devious actions are still operational with Consumers unnecessarily paying for it – this needs to be immediately eliminated.”
“Unfortunately for Consumers and Financial Advisers the distinction between Advice and Product manufacturing has been constantly confused by Politicians and Bureaucrats where historically Advisers have been unfairly blamed for the actions of others allowing the real perpetrators to avoid accountability.”
“We are pleased that Canberra is now differentiating and understanding the nuances between the role Financial Advisers and Product Manufacturers play in the industry and why Institutions should be forever banned from offering PROFESSIONAL ADVICE to consumers,” Johnston’s letter said.
“This is of course very different to Minister Jones currently leaning towards Super Funds and other Institutions having internal staff trained to give internal product and related information to Consumers without being licensed, we agree with this direction.
“We however vehemently disagree with the QAR recommendation that the Best Interests Duty should be replaced with a ‘Good Advice’ concept which allows Institutions back into giving Consumer Advice despite their profoundly conflicted vertically integrated business models. This is a very bad outcome for Consumers in our view, poor historical data supports our view.”