12 Sep A lost opportunity for consumers
A LOST OPPORTUNITY FOR CONSUMERS
IFAAA Media Release
Enhanced Public Register of Financial Advisers ‘lost opportunity’ for consumers
Earlier this year the Government announced it would set up an Enhanced Register of Financial Advisers for the benefit of consumers. The Government said the register would provide details of each adviser’s ‘credentials and status’ in the industry so that consumers could have confidence in a more transparent financial advice industry.
Last Friday the content of that register was announced, revealing significant omissions that will not make it any easier to obtain important information about an adviser. Two important details that have been left off the register are the adviser’s Financial Services Guide (FSG) and a statement as to whether the adviser meets the legal definition of ‘independent’.
“There’s no doubt that this Public Register would become something consumers could use to evaluate and compare financial planners,” said Daniel Brammall, President of the Independent Financial Advisers Association of Australia (IFAAA). “But without key information like the FSG and a statement on independence it runs the risk of becoming nothing more than an online phone book.”
Mr. Brammall, who sat on the Committee responsible for making recommendations to the Government about the Public Register, said that, “much of the information on the proposed Register already exists on the ASIC website, so the Enhanced Register was a real opportunity to pull together all the important facts onto one Government-controlled site for the benefit of the public. These omissions are a missed opportunity for the consumer.”
All financial planners must provide clients with an FSG before they give advice. The Guide contains useful information like how they are paid, what advice they are authorised to give, and whether they are associated with a bank or insurance company for example. But there is no requirement for financial planners to have this document on their website so in practice a consumer needs to make an appointment before they’re able to get this information.
In terms of meeting the definition of Independence, it is illegal for financial planners to use the term to describe their services unless they pass stringent tests set out in the Corporations Act. There is now widespread misuse of the term, Mr. Brammall contends. “Many planners use the word independent on their website and in their brochures to promote themselves even though they don’t meet the legal definition.”
“Planners who describe their services as ‘independent’ when they don’t meet the test are – at best – creating confusion and – at worst – engaging in misleading conduct. This confusion is easily removed by making it clear on the Government’s Enhanced Public Register of Financial Advisers,” explains Mr. Brammall. “It’s for this reason we’re holding our inaugural Symposium on Independence next fortnight – to explain what independence is and how can you as a financial planner achieve it.”
Consumers can see whether their adviser meets the IFAAA’s Gold Standard of Independence by referring to its website, www.ifaaa.com.au. Details of the IFAAA’s Symposium on 7 November in Sydney are also available at the website.
Contact – Susannah Kulincevic, 02 6162 2670