In its submission to the Financial System Inquiry, the SMSF Professionals' Association of Australia has proposed radical changes to the licensing regime affecting financial planners, calling for greater distinction between independent and restricted advice.
The submission suggests that the Murray Inquiry considers introducing a new licensing regime which would “encourage” greater numbers of IFAs, akin to the Registered Investment Advisor (RIA) system in the United States.
“Mandatory disclosure as to whether advice is independent would allow consumers to be informed in deciding whether the financial advice they are receiving is fit for purpose and offers them the best value,” the submission states.
While the submission makes clear that SPAA “does not contend that vertical integration…is inappropriate or should be prevented”, it also speaks out strongly against conflicts of interest and product bias existing in the sector.
“The financial advice industry has undergone significant consolidation over the previous decade with vertically integrated firms that both sell financial products and provide financial advice to consumers becoming the largest licensees in the AFSL system,” the submission states.
“The comingling of the product distribution/sales and financial advice can impair the independence of advice being provided to consumers. It is because of this that vertical integration can pose a threat to the provision of independent financial advice.”
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
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