FPA welcomes increased support for all Australians
The Financial Planning Association (FPA) has responded to the long awaited Government responses to the Parliamentary Joint Committee (PJC) Trio inquiry and the Richard St John report on Friday.
The Government has responded to the PJC inquiry recommendations into the collapse of Trio specifically around the need for clear and understandable warnings and guidance to SMSF trustees and investors. The FPA supports the PJC inquiry recommendations and the Government’s response to these recommendations.
Mark Rantall, CEO of the FPA said:
“The FPA supports all recommendations that aim to improve access to and transparency of financial advice for all Australians. We also support recommendations that address our concerns about better access and justice in compensation for poor financial advice and more importantly poor financial products.”
Addressing the FPA thoughts on the Governments’ response to the Richard St John report, Rantall believes the Government needs to do more.
“The FPA fully supported the thorough report by Richard St John, originally announced in May 2012, and we believe the report recognised that obligations on the licensed financial advice community have been ‘unbalanced’ in comparison to the light-handed regulatory approach of product issuers. The Government has taken some of these recommendations on board, but has more to do in order to align with the overall sensible approach made by the Richard St John report.
“The FPA does not support the notion that financial adviser misconduct is the only reason why compensation has been awarded to date. We believe that this ignores the role played by other gatekeepers in the value chain in consumer losses, something Richard St John highlighted in his report. The problem is that the only, and the easiest, source of compensation for consumers is through the financial adviser and accessing compensation from other gatekeepers such as product providers, directors, auditors is not possible, too difficult or requires a class action – and this is part of the problem.”
The FPA has also stated that they do not support some of the Government’s recommendations for Professional Indemnity Insurance (PII) changes stating that increasing PII requirements will not solve the problem, but simply increase costs and further restrict financial advisers in servicing consumers due to increased costs and red tape.
“The FPA calls on the Government to acknowledge and support Richard St John’s recommendation to improve the dispute resolution system for financial service consumers. A significant limitation with the current system is the inability of EDR schemes to apportion responsibility for misconduct amongst responsible product issuers, financial advisers or other licensees. This can significantly restrict consumers’ access to full compensation for loss as it often results in the parties responsible for the cause of the loss not being held to account or required to pay compensation.”
The FPA will continue to advocate and work with Government and the regulators to better protect Australians from failings by gatekeepers at all levels of the value chain, such as those exposed in the Trio and Richard St John reviews.
Read the Government’s response.