What do a property developer and a Certified Financial Planner (CFP) have in common? Not much, you may think. However, right now, the law does not prevent either from calling themselves a “financial planner” and providing financial advice in some shape or form to consumers. And what’s more, all of the following individuals can do so as well:• product sales representatives
• life insurance brokers
• stock brokers
• general insurance brokers
• mortgage brokers
• real estate agents
• financial information
service (FIS) officers
• financial counsellors
• bank tellers
• accountants
• lawyers
• paraplanners
• business development
managers (BDMs)
• client service representatives
• tax agents
• property developers
• auditors (especially those
who deal with self-managed
super funds).
Indeed, we may well have asked, who CAN’T call themselves a financial planner? What is evidently clear is that the range of individuals who can provide advice is extensive. Within financial services, we can work through the jargon, regulations and scope of these roles to understand the breadth and limits of advice that can be provided by each one. But where does this leave the consumer? It is our view at the FPA that the current state of affairs is unacceptable for consumers who need to understand what advice is, how to pay for it, and who they can rely on to provide it.
The Future of Financial Advice (FoFA) reforms work towards achieving transparency and completing this complex puzzle. However, we strongly believe that without clarity around who can call themselves a financial planner, a key piece of the puzzle is missing. The current lack of restriction on the use of the term financial planner, evidenced in the long list above, creates a significant gap in consumer protection. It leaves unsuspecting consumers open to influence by inappropriately qualified individuals calling themselves financial planners and/or promoting themselves as providers of financial advice. This state of affairs leaves consumers exposed and directly undermines our collective aim to create consumer trust in financial advice and advice providers.
It is the FPA’s strong belief that to strengthen consumer protection and to continue our journey towards creating a true profession, we must restrict the use of the term “financial planner” to only those who have the highest level of education, competency, ethics and standards and, just as importantly, commit to their professionalism by being a member of a recognised professional body, which has been approved by ASIC. With the release of the draft FoFA legislation, the FPA is delighted that the Government acknowledged the FPA’s advocacy on this issue on behalf of its members, especially our 8000 practitioners, and Australians who need to seek financial advice.
In particular, the Minister’s announcement at the release of the first tranche of FoFA included a time-line for a consultation paper from Treasury to investigate introducing a law to restrict the use of the term “financial planner”, with the paper due out prior to Christmas. It is reasonable for consumers to have an expectation that when they are given financial advice, this is provided by a professional backed by appropriate qualifications and an ethical framework that they adhere to. Restricting the use of the term “financial planner” is now acknowledged by Government as the way to achieve this. Our fight for our members and for Australians continues.
