The patron of the SMSF Professionals’ Association of Australia (SPAA), Sir Anthony Mason, has called on all participants in the financial services industry to promote trust and confidence in the industry by placing a commitment to professional standards above all.
Opening the 2014 SPAA SMSF National Conference in Brisbane, Sir Anthony also said the likely effects of amendments to the Future of Financial Advice (FoFA) legislation had been overstated.
“It is to the advantage to all the stakeholders in the financial services industry that their actions should be directed to promoting confidence in the industry,” Sir Anthony said.
“That calls for fair and open dealing in an industry whose principal purpose, as its name implies, is to provide services rather than to sell products. Advisers are professionals. Salesmen, no matter how successful they may be, are not professionals.
“More than anything else, an emphasis on high standards of professionalism is likely to generate confidence in the financial services industry, and in particular in superannuation.”
Obligation remains
Sir Anthony, a former Chief Justice of the High Court of Australia, said that FoFA amendments proposed by the coalition government would not remove a financial planner’s obligation to act in the best interests of clients, despite persistent commentary suggesting the amendments would significantly water down consumer protection.
“If it should come about that some aspect of the best interests duty – say, the catch-all provision – is to be wound back, it would be a serious mistake to think that a financial adviser is under no duty to act in the interests of the client,” Sir Anthony said.
“Quite apart from other relevant statutory provisions, the common law recognises a duty on an adviser to act in the interests of its client. “True it is that the provisions of the contract between an adviser and client can regulate the rights and duties of the parties to the contract, and at least to some extent the provision can preclude or limit the adviser’s liability. But it would be unsafe to assume that cleverly worded contractual terms will always protect the financial adviser who is acting in his own interests rather than the interests of the client.
“And there is a case for saying that people entering into contracts with financial advisers should be warned or advised as to the existence and consequences of provisions that exclude or limit liability on the part of the adviser, or which have that effect by limiting the advice or the scope of the instructions given to the adviser; it is the use or perhaps even the abuse of such provisions that may give rise to problems in the future.”
