Independent financial advisers should be given permission to enjoy “conflicted” practices implemented in the SMSF sector, an industry association has argued.
The Association of Independently Owned Financial Professionals (AIOFP), an industry body representing directors of non-aligned financial planning groups, has penned a submission to Treasury calling on government to “even the playing field” in the financial services sector.
“Over 90 per cent of the advice industry is financially cross-subsidised by administration revenue where institutions achieve it via vertically integrated models and SMSF advisers via SMSF structures,” the submission states.
“With the banning of platform administration revenue sharing with independent advisers, FOFA is turning a ‘blind eye’ to the institutions' vertically integrated models' cross-subsidisation activities and disregarding SMSF internal administration dealings.
“Both activities are fundamentally conflicted as they are blatantly recommending their own internal administration services and disregarding all other options – surely the best interests regulations must come into play here.”
AIOFP executive director Peter Johnston told SMSF Adviser the association is not opposed to the SMSF sector and is not calling for changes to be introduced affecting SMSF service providers, but rather, that the same “benefits of administration revenue” be opened to IFAs.
“[SMSF administration and vertically integrated models] can enjoy the benefits of cross-subsidisation ... so why can't independents who choose not to use SMSF structures or work for the institutions enjoy comparable conditions?” Mr Johnston asked.
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