The Association of Financial Advisers (AFA) is calling for recognition of the competency and track record of existing advisers in its responses to the Professional Standards of Financial Advisers Bill (the Bill) and a more comprehensive Regulatory Impact Statement (RIS) to the draft Life Insurance Reforms (the Reforms).
AFA CEO, Brad Fox said, “There are financial advisers in our AFA community who have a long and untarnished track record of providing quality advice, including full compliance with professional association codes, no ASIC breaches, an Advanced Diploma of Financial Planning, or higher, including the post-graduate FChFP designation, and a record of continuing professional development. The extensive knowledge, skills and experience of these advisers deserve to be formally recognised.”
In response to the Bill, Mr Fox said the draft legislation calls for the establishment of a Standard Setting Body to decide upon professional standards of financial advisers, including transition arrangements for existing advisers, with a board of seven directors. “To ensure that the Board fully understands how standards will affect small business financial advisers, we believe it is absolutely essential for one of these directors to be a small business practitioner.”
The AFA expressed similar sentiments in its response to the RIS, arguing that the impact of the Reforms are so huge they could have unintended adverse consequences for both the industry and consumers.
“It is difficult to see how consumers will benefit from the Reforms, which are likely to significantly increase costs to Australians seeking life insurance advice,” Mr Fox said. “Adjusting to a reduction in remuneration from 1 July 2016, combined with a two-year clawback period, will create business uncertainty and reduced viability for small business advisers. We expect to see many advisers exit the industry as a result and that is an extremely poor outcome for consumers.”
Mr Fox said the loss of experienced professionals is likely to come at great cost to Australia in the form of reduced access to affordable, personal financial advice and a consequential increase in underinsurance and reliance on government benefits like the Disability Support Pension. “These reforms are very important in the continuing evolution of financial advice into a widely-recognised and understood profession and that is why we are focused on helping to improve the draft bills that are before us.”
Mr Fox said the AFA believes the RIS needs to take into consideration the likely impacts on the sustainability of financial advice small businesses, employment in the sector, effects on the underinsurance gap and also determine what the benefits are to consumers from the legislation. “The legislation should not progress without these concerns being quantified and considered,” he said.
To view the AFA’s response to the proposed amendments of the Professional Standards of Financial Advisers Bill, click here: https://www.afa.asn.au/resources/afa-professional-standards-submission
To view the AFA’s response to the draft legislation of Life Insurance reforms, click here: https://www.afa.asn.au/resources/lif-submissions
