John Brogden

The Financial Services Council has called for new architecture for Australia’s financial advice industry.

John Brogden, CEO of the FSC said: “Significantly improved adviser education, increased ASIC powers and greater disclosure of experience and ownership are needed to increase public confidence in financial advice.”

The FSC’s submission to the Financial System Inquiry recommends a revised model for financial advice which includes an Advice Competency Standards Board to oversee the development of competency standards, adviser education and the register of advisers.

“Where appropriate ASIC should have new powers to prevent someone from managing a financial services business,”  Mr Brogden said.

“The FSC supports an enhanced public register of advisers which discloses the ultimate owner of the licensee.”

“Consumers  have the right to know the ownership and alignment of the adviser they are dealing with.  The register should disclose the education, experience and history of advisers.”

The FSC has also called for greater clarity on the definitions of financial advice.

“Better definitions and labelling of advice and sound architecture for building competencies are critical to gaining the trust and confidence of consumers,” Mr Brogden said.

“We have recommended the Murray Review considers a model which establishes clear segments of personal advice, general information, factual information and intrafund advice and for new adviser competencies to address these segments.”

“Our revised model for advice clearly distinguishes between personal advice and information and ensures consumers will receive appropriate advice from advisers with appropriate competency and skills,” he said.

The FSC’s submission highlighted four areas where more work needs to be done in the advice sector including:

• clarification of the different segments of financial advice
• adviser competence and professionalism
• governance and disclosure, and
• increased powers for ASIC.

Click here to read the FSC Financial System Inquiry submission.

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Andrew Bragg

The current structure of Australia’s insurance framework is inhibiting product innovation, creating underinsurance and unnecessary public sector cost, the Financial Services Council said yesterday.

In its phase two submission to the Financial System Inquiry, the FSC said: “Regulation must allow insurers to meet consumers’ needs.”

Andrew Bragg, Director of Policy for the FSC said: “Australia’s insurance framework is too fragmented. It requires separate licences for individual products.”

“This prevents insurers from offering multi-purpose products such as combined health and life insurance policies to meet the needs of Australian consumers.”

“We are recommending to the Murray Review that the prudential framework be streamlined so the industry can develop innovative products that better meet the needs of consumers,” Mr Bragg said.

The FSC also said private disability insurance could be leveraged to meet the ballooning costs of disability welfare in Australia and to reduce the increasing pressure on the Commonwealth Budget.

“Life insurance can be the private sector solution to the increasing budget costs of welfare, just as superannuation is to an aging population and private health insurance is to managing health care costs,” said Mr Bragg.

“Modelling by Deloitte Access Economics shows if the government treated private disability insurance in a similar way to private health insurance, $8.5 billion in net savings could be achieved.”

“The costs of the National Disability Insurance Scheme and Disability Support Pension must be sustainable and should not be monopolised by the government.”

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