Facts must beat dogma on life/risk remuneration
ANALYSIS
Consumer groups have had significant influence over the policies which have shaped the financial advice profession over the two decades because successive governments have given them multiple chairs at the table.
From the Future of Financial Advice (FoFA) through to the make-up and tenor of the Financial Adviser Standards and Ethics Authority (FASEA) board, consumer groups have had a seat at the table and a strong voice in decision-making.
When the Financial Planning Association (FPA) earlier this week sought to publicly counter calls by consumer groups for a total ban on commissions with respect to life/risk advice, it backed up similar comments from the Association of Financial Advisers and the Financial Services Council.
The bottom line, however, is that while financial planning groups have sought to present a united front on key issues important to the interests of financial advisers, they are facing a united front from consumer groups and, sometimes, from the industry superannuation funds lobby.
The consumer lobbying being referenced by the FPA this week was in fact a joint submission to the Quality of Advice Review (QAR) authored by the consumer groups, Choice, Consumer Action Law Centre, Financial Counselling Australia and the Financial Rights Legal Centre.
It will not be lost on financial advisers, that some of these groups have, over the years, received funding via the Australian Securities and Investments Commission (ASIC). It will also not be lost on advisers that there were just as many consumer directors on the board of FASEA as there were directors related to the financial planning profession.
Given that successive industry surveys have confirmed that financial advice has been priced beyond the reach of many ordinary Australians, the influence of consumer groups on boards such as that which oversaw the now defunct FASEA might well be viewed as disproportionate.
What should concern life/risk advisers and the life insurers is that, notwithstanding ASIC data confirming that the situation which gave rise to the Life Insurance Framework has improved significantly over the past half decade, the consumer groups have not budged a centimetre in their opposition to commissions.
Just as the consumer groups were saying in 2016/17, they stated the following in their joint submission to the QAR.
The Review should recommend the prohibition of the remaining forms of conflicted remuneration, including a ban on:
- the life insurance exemption
- the general insurance exemption
- the consumer credit insurance exemption
- the timeshare commission exemption
- asset-based fees.
So, all these years later and notwithstanding the clear evidence that the LIF and the FASEA regime have resulted in significant change the position of the consumer groups has not changed. It is a dogmatic “no”.
It is to be hoped the QAR looks at the facts and not the dogma when it presents its final recommendations to the Government next month and that the Government also embraces facts and the reality of a widening insurance gap.
Yeh the so called consumer groups have done an awesome job protecting consumers against Advice, successfully pricing out via Regulation & Red Tape cost overload so that 90% of consumers can’t afford Advice.
Now 90% of Aussie financial consumers can go to pub, mates, family, finfluencers and scammers for their Advice.
Consumer groups should be so proud.
The biggest problem is that these so called “consumer groups” are no longer consumer groups at all. They have been hijacked by ideological activists, who have identified “consumer groups” as a government funded meal ticket to impose their ideological beliefs on others, and further their activist careers. They do NOT represent the interests of most consumers. That is why so much financial services regulation is just making things worse for consumers rather than better. Real consumers have been betrayed by these charlatans.
Interesting. Do these consumer groups conduct independent surveys of the public (not cherry picked surveys) about what they want? They represent the consumer, yet it seems they probably don’t have a voice and the ideology of whoever is leading the consumer group is substituted in. Surely there should be some caveats to understand what the public wants if they want to receive government & ASIC funding.
Some questions need to be asked of these supposed consumer groups. How many of those employed in these groups have a current relationship with a financial planner. If the majority of the employees of the group do not, then they are unable to give any input on matters that relate to financial planners. If they are all engaged with industry funds, then they can give their input as part of the ISA and not count as a separate voice considering they are pushing the same ideology.
its long been a disgrace anyone was listening to these corrupt and conflicted organisations…they DO NOT represent consumers, rather themselves and vested interests.
The current QAR has wound up being not much different to so many other talk fests, people with no clue what they are talking about are actually getting to influence very important industry policy.
As long as that keeps happening i fear the industry will just never recover and those that remain will do so, at great expense to their mental health – for how can all the stupid BS that you have to go through not wear you down???
Choice lost me years ago when they came out against commissions for life insurance on the basis that all commissions are bad and then ran a publicity campaign to review your electricity provider and they received a commission on any new sales. Interestingly they are still getting paid kickbacks according to their webpage. You can be excused for being wrong, you can’t be excused for a lack of ethics.
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