|
A win for consumers and financial planners: FPA
24 November 2009
The Financial Planning Association of Australia (FPA) has welcomed the recommendation by the Parliamentary Joint Committee on Corporations and Financial Services (PJC) that the relationship between a financial planner and their client becomes one of a fiduciary duty of care.
FPA CEO, Jo-Anne Bloch, said that FPA was pleased with most of the recommendations outlined in the PJC report. The FPA also notes that despite the devastating losses faced by Storm clients, the PJC has adopted a longer term approach to addressing issues.
While FPA members are already required to put their clients first as part of the FPA’s Code of Professional Practice, a fiduciary responsibility will require all financial planners to do so as a matter of law.
“Consumers can feel more secure, knowing that the financial advice provided is protected by a legal or regulated mandate,” Ms Bloch added.
“The PJC has also responded to the FPA’s submission that the banning of commissions should not be legislated. The FPA and IFSA have demonstrated that the industry has taken this forward already.” Ms Bloch noted.
The FPA also welcomes the PJC’s recommendations to:
- Make fee based advice tax deductible, which will enable more Australians to afford the benefits of advice.
Improve professional standards through an industry based professional
- standards body to enforce fiduciary
and ethical responsibilities for all those who wish to be genuine financial planners.
- Work with ASIC to raise the education standards of financial planners well above those set out in Regulatory Guidance 146.
- Ensure ASIC adopts a risk based surveillance system, mentioning criteria such as the number of Certified Financial Planners engaged by a licensee
- Tighten the AFS Licensing requirements and enable banning of individuals.
The PJC has recommended a package of changes to strengthen the regulatory framework for financial advice in Australia. The FPA agrees that there is no one silver bullet that will prevent a Storm Financial, and welcomes the PJC approach as sensible, and practical.
“The FPA has lead the reform process through the release of our Code of Professional Practice, remuneration policy and education proposals. Our members have indicated that they are up for the challenge and want to restore confidence in the profession of financial planning,” Ms Bloch said.
“The FPA would still like to see the term ‘Financial Planner’ defined in the law. We still believe that this would be the best way to achieve all of the above, and help consumers understand the real differences between the various ‘advisers’ that exist,” Ms Bloch stated.
The FPA is also calling for a wide ranging review of retail client compensation, which includes PII and FOS.
“This issue has long been a source of anxiety for the FPA. If we are now to grapple with a compensation scheme, we want to work with the PJC and other stakeholders to ensure a reasonable outcome that does not simply raise the costs for financial planners who are doing the right thing.” Ms Bloch said.
The FPA would like to acknowledge and thank the committee for its broad based consultation process and genuine consideration of the issues from all perspectives.
“This is only the start of the process, however, and we will now work with the PJC and Government to discuss the details and to work towards ensuring that Australians receive quality advice which provides long term personal economic benefits,” Ms Bloch concluded.
For further information, refer to media contacts
Note to journalists
The Financial Planning Association of Australia (FPA) is the peak professional body for financial planning in Australia. The FPA has an office in each capital city and a network of 31 Chapters across the country, which provide a focus for business networking and professional development activities for more than 12,000 members. FPA practitioner members manage the financial affairs of more than 5 million Australians whose investments are valued at $630 billion.
|