Financial System Inquiry submission recommends consideration , fairness and co-regulation
The Financial Planning Association of Australia (FPA) has submitted its recommendations to the Financial System Inquiry with a view to creating a more efficient, effective and innovative financial system, consistent with financial stability, professionalism and fairness.
Dante De Gori, General Manager of Policy and Conduct at the FPA, said: “The Financial System Inquiry is a valuable opportunity to assess how our financial sector can adapt to better provide all Australians with the opportunity to experience the benefits of our world-leading system.
“The FPA urges the Inquiry to consider the end user of our financial system – Australian citizens – and the role that regulators and industry participants play in ensuring their financial well-being. This includes a consideration of how Australians can better engage with the financial system, including affordability and access to professional services such as financial advice. To this end, we again call for the tax deductibility of upfront financial advice fees as a key recommendation in our submission.”
In addition, the FPA has again emphasised the need to differentiate between general and personal advice with respect to their relevance in regulating financial advice.
Mr De Gori stressed, “The current framing of ‘general advice’ versus personal advice exposes investors to undue risk, with respect to the regulation of financial advice. Many retail investors are not be able to distinguish between general and personal advice and are at risk of making inappropriate financial decisions for their specific circumstances as a result. A review of the general/personal advice definitions, and the risks these definitions pose to consumers, should therefore be considered as part of the Inquiry.”
The FPA highlighted several key areas where reforms would improve Australia’s financial system efficiency, as well as foster stability, prudence, and public confidence. The FPA submission calls for:
- The role of professionalism and professional obligations to be included in the regulatory design of the Inquiry, particularly where professional obligations would improve the efficiency, competitiveness, financial stability, public confidence, and capacity of the financial system.
- A better facilitation of industry participants working with regulators and the government through co-regulation models, to improve efficiency and further enhance professional values in the sector.
- Enhanced fairness of Australia’s financial system. The FPA recommends the Inquiry should recognise and respond to varying degrees of wealth and opportunity which prevent some users or potential users of the Australian financial system from fully engaging with the system.
Mr De Gori concluded: “The FPA welcomes the opportunity to contribute to the Inquiry. We look forward to working together with FSI panel to cultivate a financial system that meets the needs of its users, both the professionals and bodies who comprise it and, ultimately, the end users of our financial system – Australian citizens.”