John Hewison Studios
Founder and Director
The line in the “FoFA Licensing” sand has been drawn
31 Mar 2014
On yesterday’s “The Insiders” program on the ABC, Finance Minister Mathias Cormann stated the government had no intention of softening the Best Interest Duty in FoFA legislation.
He also stated that he had no intention of softening the stance on banning of commissions to financial advice given by “independent financial advisers” (his term). However, he saw no problem with the payment of sales commissions and incentives to product salespeople who worked for banks and other financial institutions.
During the week former Federal Court Judge the Hon. Kevin Lingrem AM, QC suggested that the only way to solve the “Best Interests Duty” was to legislate the difference between Independent Financial Advisers (IFAs) and Financial Product Salespeople (FSPs).
The Financial Planning Association of Australia (FPA) already has a clear definition of what it considers to be the appropriate criteria that defines an IFA, encompassed in the degree based CFP professional designation. The qualification requires compliance with a set of practicing standards and ethical behaviour requirements including the “Best Interests Duty” backed up by a robust disciplinary process. These are also the requirements of the accepted definition of any professional practitioner in any discipline.
My good friend and fellow independent Certified Financial Planner (CFP) Dominic Alafaci and I have been discussing with the FPA the concept of accepting rather than trying to ban product selling, and defining the distinct separation of what is an IFA versus a FSP. This would be a far more effective solution and give the consumer a clear choice and understanding between the two roles.
ASIC has announced a lifting of the education base to a degree based standard by 2017 – again in line with the FPA’s current standard. But how many financial product salespeople are going to have university degrees? A change to the financial services licensing is imperative.
Now that we seem to have a growing base of acceptance on a REAL solution to effective legislation of financial advice, that is, the line in the sand between independent advice and product sales, let’s get on with making it happen.
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.