Phil Anderson
The Association of Financial Advisers (AFA) has welcomed the release of the Financial System Inquiry (FSI) report (the Report) following a 12-month review into the Australian financial system.
AFA Chief Operating Officer, Phil Anderson, said the report addressed a range of key issues right across the Australian financial system. “This is a critical report that is likely to have significant implications for both consumers and participants in the industry,” he said.
“We particularly note the measures focused upon competition and consumer outcomes.” Mr Anderson said it will take the industry some time to consider the implications of the 44 recommendations and other key observations.
“We welcome the Government’s intent to consult broadly on these recommendations as they consider them,” he said.
“The recommendation with respect to increasing adviser competency standards is broadly consistent with recent proposals from within the industry and recommendations put to parliamentary inquiries. The AFA supports the introduction of a relevant degree requirement for new advisers and an increase in standards for existing advisers based upon a range of options.”
The AFA also noted the recommendation with respect to life insurance remuneration for financial advisers. “We are conscious of the concerns expressed in the Report and the recent ASIC Report on life insurance with respect to the risk of excessive incentives inappropriately influencing adviser behaviour,” Mr Anderson said.
Mr Anderson said the AFA believes that care must be taken in seeking to get the right balance on commission arrangements.
“The outcome needs to address the significant time and cost involved in giving initial strategic advice on life insurance and implementing life insurance business,” he said.
“This is a matter that is currently being considered by the joint AFA/FSC Life Insurance and Advice Working Group. The AFA is of the view that financial advisers should be able to be appropriately remunerated for the work they do.”
The AFA is awaiting the Government’s response to the Report and is looking forward to working with a range of stakeholders as it further considers the Report recommendations.
