Financial reforms toughen laws on advisors
(29 April 2011 – Australia) The Future of Financial Advice reforms could have a large impact on investors and advisers according to Financial Services and Superannuation Minister Bill Shorten.
The reforms include a requirement for financial advisers to get clients to opt-in every two years if they wish to continue to receive ongoing advice, they also include banning all commissions on risk insurance inside superannuation.
There would be a ban on volume-based payments and Mr Shorten said the changes would provide financial advice consumers with extra security after the collapse of Storm, Trio, Westpoint and other financial service providers.
'It will also provide more certainty to the financial advice profession, which has been closely engaged in the consultation process,' Mr Shorten said.
'The vast majority of financial advisers are dedicated professionals who give good advice to the best of their ability.
'But that doesn't change the fact that many consumers lack trust in the profession and there is a perception that advice is under-regulated and open to abuse.'
Financial Services Council (FSC) chief executive John Brogden said the government’s package was fairer than what was proposed a year ago, he said a two-year, rather than a one-year financial advice renewal period was better for consumers and fund managers.
The FSC had lobbied the government against a proposal to ban volume payments, saying it would ensure the pooled investment vehicle would continue and consumers would continue to get the benefits of scale when they invest in managed funds.
Mr Shorten said the reforms were needed to improve the industry and Australians' trust in financial advisers.
'We will continue to consult with stakeholders in the lead up to the release of draft legislation later this year,' he said.
There would be a ban on volume-based payments and Mr Shorten said the changes would provide financial advice consumers with extra security after the collapse of Storm, Trio, Westpoint and other financial service providers.
'It will also provide more certainty to the financial advice profession, which has been closely engaged in the consultation process,' Mr Shorten said.
'The vast majority of financial advisers are dedicated professionals who give good advice to the best of their ability.
'But that doesn't change the fact that many consumers lack trust in the profession and there is a perception that advice is under-regulated and open to abuse.'
Financial Services Council (FSC) chief executive John Brogden said the government’s package was fairer than what was proposed a year ago, he said a two-year, rather than a one-year financial advice renewal period was better for consumers and fund managers.
The FSC had lobbied the government against a proposal to ban volume payments, saying it would ensure the pooled investment vehicle would continue and consumers would continue to get the benefits of scale when they invest in managed funds.
Mr Shorten said the reforms were needed to improve the industry and Australians' trust in financial advisers.
'We will continue to consult with stakeholders in the lead up to the release of draft legislation later this year,' he said.
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