In its submission to the parliamentary committee now overseeing the government’s Bill to amend FOFA, SPAA stated it does not support the government’s amendments to provide a limited exemption from the ban on conflicted remuneration for general advice which is provided in a specific set of circumstances.
“We strongly believe that there is no room for conflicted remuneration in financial services, even where the financial advice being provided does not specifically take into account the consumer’s personal circumstances,” the submission stated.
“We believe the best consumer outcomes must be achieved independently from any links with product remuneration.”
SPAA also said a “major concern” with the amendment to provide a limited exemption for general advice from the ban on conflicted remuneration is that it will cause AFS licensees and their authorised representatives to move from providing personal advice to general advice in a vertically integrated arrangement “to take advantage of commission remuneration”.
“The limited scope of the exemption from the ban on conflicted remuneration is clearly targeted at general advice provided by vertically integrated financial services firms, which may encourage greater consolidation and integration in the industry,” SPAA stated.
“While SPAA does not contend that vertical integration of financial services is inappropriate or should be prevented, allowing these firms to structure remuneration around commission-based payments linked to general advice will be detrimental to consumers seeking financial advice.”
I agree that conflicted Rem has issues but commissions help pay for advice, what’s a better option SPAA? Did I miss that bit in the article? What’s SPAA’s genuine, customer centric solution? Nothing is free, so why should advice be free? Are SPAA’s services free?
Clients won’t pay for advice easily, so how do we fix it? Free advice on insurance recommendations is available off the TV. Granted that’s better than zero cover, but how many customers don’t see the difference? Most. How many customers cancel their insurance in Super without knowing, or replace it with Direct cover without knowing? Too many.
So the current non-conflicted rem solution is to tell the client that they need to go and pay for quality advice to buy a product that generally they don’t realise they need and if they do realise they need it, definitely don’t want to buy it. Nor do many understand the difference between quality and junk or appropriateness without help.
SPAA looking to get their name in the news with some negative publicity, pathetic.
Whilst the majority of advise is owned by banks and fund managers consumers will find it difficult to receive good advise.
The issue with advise is not how you pay for it but the quality !!