The Financial Planning Association of Australia The Financial Planning Association of Australia

Enshrinement of “Financial Planner” to provide greater consumer protection

The Financial Planning Association has welcomed the Government’s release of the draft legislation for enshrining the term financial planner/adviser in Australia.

The draft legislation, released today, follows extensive consultation with the financial planning industry and acknowledges the protection and certainty this will provide to the Australian public.

The FPA has led the pathway to professionalism in the financial planning industry and the protection of all Australians. In April 2011, the FPA originally called on the government to restrict the term “Financial Planner” under law.

Mark Rantall, CEO of the FPA said:

“This is a fundamental public confidence issue. Only 1 in 5 Australians currently get financial advice and some of this is due to consumers not knowing who to trust. Consumers deserve the right to differentiate between a qualified, professional financial planner and anyone who happens to hang out a shingle calling themselves a financial planner. The FPA has long called for ‘truth in labelling’ and this draft legislation from the government responds to those calls.”

Currently, under the Corporations Act 2001, there is no constraint on individuals calling themselves financial planners irrespective of their training, competence, and even licensing.

“Whilst FPA members hold some of the highest educational and ethical standards in the industry, there are those in the industry who call themselves financial planners but are seemingly unaware of the specific competency, training, licence, professional standing and services provided. This legislation should put a stop to those bad apples who have misled the Australian public and tarnished the profession by wrongly using this title.”

“This is a great win for consumers and strengthens the benefits of the FoFA reforms, in particular the introduction of Best Interest and the removal of conflicted remuneration,” said Rantall.

The draft legislation states that only those fully licensed and authorised to provide personal financial advice can call themselves a financial planner/adviser but did not propose that financial planners should be a member of a professional association, as per the original FPA proposal.

“Membership of a professional body, like the FPA, provides additional safeguards to consumers in terms of the professional integrity and accountability of their financial planner. Though this is a significant first step, the FPA will continue to advocate for membership of a professional body and/or an ASIC approved Code as the ultimate criteria for restricting the term financial planner/adviser”.

The FPA also welcomes the draft regulations released today to confirm the removal of the existing accountants’ exemption. The FPA has long advocated that in order to provide greater consumer protection then all providers who want to provide personal financial advice must be licensed.

Submissions for both papers close 21 December 2012.