Did you see this piece just before Christmas?
Fin Services minister Kelly O’Dwyer putting forward legislation no less to empower ASIC with product intervention powers and the ability to now ban aspects of long-standing remuneration practices where there’s a direct link between remuneration and distribution – which is just about everywhere in today’s fin services.
The journalist quotes ‘mis-selling’ of insurance through car dealerships as an example of practices that might be seen with “little or no benefit” to Australians. However, this casual holiday reading may miss something more important for the many owners of fin services businesses.
Remember, the origin of this proposed legislation is David Murray’s 2014/5 Fin Services Enquiry.
Murray and his panel of experts hoped their enquiry would address their findings that most Australians find it difficult to know the difference between financial advisers and financial distributors; that the existing disclosure regime produces complex and lengthy documents that hinder not help, understanding; and that the comparison of different financial product features, fee structures and fine print, makes purchase decisions ‘too hard’ for too many Australians.
I read all this and conclude that David Murray and his panel was saying that ‘advice’ is not just another financial ‘product’.
His enquiry took deliberate aim at the practice of making and selling financial product – vertical integration –
that the banks, superannuation funds, large insurance and investment providers made as common as sand on our holiday beaches.
With the Hayne Royal Commission taking off in February, the reform momentum isn’t about to subside.
In fact, I reckon this legislation to ban products and potentially rip-up conflicted, long-established rem practices is a significant new crack in the Berlin Wall that for too long has protected, enriched and supported the systemic product conflicts that have resulted in so few Australians trusting the product distributors that masquerade as professional financial advisers.
Might go some way to restore the social license essential for Australians to enjoy greater financial certainty in their lives.
What do you reckon?
About Jim Stackpool
For nearly 30 years Jim has influenced, coached, and consulted advisory firms across Australia. As founder of Certainty Advice Group, he leads a like-minded team of professional advisory firms seeking to create greater certainty for their clients. As an author, blogger, columnist, and keynote speaker, Jim is regularly called upon for his professional insights into the advice industry. His latest book Seeking Certainty is available now.