Brad Fox

The establishment of a central register of financial advisers, which was included in the Future of Financial Advice (FoFA) amendments deal announced last week by the Coalition, with the support of Palmer United Party (PUP), will benefit both consumers and Association of Financial Advisers (AFA) members.

AFA CEO, Brad Fox, said the creation of a detailed register is an excellent step forward in helping Australian consumers identify and engage with AFA members and other professional financial advisers.

“Research into consumer understanding of financial advice identifies a number of barriers to seeking financial advice. One of those barriers is identifying who a professional adviser is and who is not, which includes identifying whether an individual has the legal authority to provide personal financial advice,” Mr Fox said. “A central register will simplify the selection process for consumers and help ensure they are getting advice from a professional adviser.”

Mr Fox said consumers should be able to use this register to understand that they are seeing, or going to see, an adviser that can provide the expertise they need.

“We have seen examples where unqualified people have held themselves out to be a financial adviser,” he said “Only people with appropriate qualifications, experience and legal authority will be on the register. This will increase the protection available to consumers.”

While the exact details of the content that will be included on the register are not yet finalised, the AFA expects that it will include professional association memberships and any professional designations held by an individual adviser.

“We believe that a member of the public looking at this register will want to see the qualifications held by the adviser including any designations they may have such as the AFA’s Fellow Chartered Financial Practioner (FChFP) or Chartered Life Practioner (ChLP), as well as their AFA membership, meaning they are therefore accountable to the AFA Code of Ethics,” Mr Fox said. “In this way the consumer gains added assurance their adviser is acting professionally, and advisers will see further benefit from joining the AFA. Professional association membership is an obvious and important point of difference.”

Mr Fox said that the rebuilding of consumer trust in financial advice will need to overcome several hurdles, but the adviser register is a step in the right direction. “Transparency builds trust, and the register, along with the other requirements suggested by PUP that explicitly require an adviser to ensure the client is aware of their rights, and the adviser’s responsibility under the Best Interests Duty, shows FoFA has moved in the right direction.”

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Brad Fox

The Association of Financial Advisers (AFA) has expressed support for a number of Senate Committee recommendations aimed at increasing advice standards, consumer trust and the professional behaviour of financial advisers and planners.

AFA CEO Brad Fox said the report handed down by the Senate Economics References Committee (the Report) identified inappropriate advice behaviours. “The AFA condemns the behaviours identified in the Report,” he said. “The trust of consumers has been breached and that is simply not good enough. Some of the recommendations in the Report are consistent with our views on what is required to further the evolution of financial advice into a trusted profession.”

Mr Fox said the AFA Code of Ethics is very clear that members cannot act in the ways identified in the Report.  “While our members are not implicated in the Report, the AFA’s empathy and understanding is extended to consumers who were affected.”

In referring to some of the more than 60 recommendations from the Report, Mr Fox said the advice market must treat its release as a pivot point from which to rebuild consumer trust in financial advice.

“Thankfully, over the past five years significant momentum has been built toward professionalism in advice,” Mr Fox said. “This must continue so we never see these types of issues arise again.”

Mr Fox said the AFA encourages consumers to seek an adviser who is a member of a professional body, as these advisers subscribe to a Code of Ethics that requires professional and ethical behaviour at all times. “A professional body will hold its members to account. It is just unfortunate that not all financial advisers choose to become members.”

The AFA will consider the detail contained in the Report and subsequent recommendations. “We need to carefully review the recommendations to assess whether or not they are likely to be effective in stamping out inappropriate systemic behaviours,” he said. “What is most important is that we move forward with even more vigour towards building a universal culture of professionalism that earns the respect of the community.”

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