Announcements made yesterday by Parliamentary Secretary to the Treasurer Steven Ciobom to proceed with proposed changes to Future of Financial Advice (FoFA) reforms after a temporary freeze has reignited the industry debate.

John Hewison, Managing Director at Hewison Private Wealth is calling for the Government to urgently draft legislation that separates licensing Independent Financial Advice from Financial Product Sales, to find a workable outcome to a debate that has raged for two decades.

“Australian consumers deserve a clear definition, understanding and choice between professional advice and product sales. Finance Minister Mathias Cormann has stated that he has no intention of dropping the best interest duty nor the ban on commissions paid to financial advisers.

“However, he also said that he saw no problem with product salespeople like bank branch employees being paid commissions and/or incentives by their employers.  This decision changes the game plan completely for the industry and consumers”, Mr Hewison said.

The licensing of financial planners and advisers under FoFA is a one-size-fits-all model, where Independent Financial Advisers (IFA) and Financial Product Salespeople (FPS) are considered equal. However, an IFA under the FPAs requirements holds both tertiary qualifications, specialist designations and specialises in complex strategic planning and financial management advice based activities.

“A financial product salesperson working for a product manufacturer will never be able to fulfil the best interest duty.

“The proposed removal of the ‘opt in’ requirement is sensible, as the approach to fee disclosure is unnecessary and very expensive to implement.  However, exemptions to the ‘general advice’ provision which enable commissions and the removal of the best interest duty is against both the spirit of the legislation and consumer interests,” Mr Hewison said.

FSR licensing aims to regulate the industry by placing professional advisors on the same standard as an individual selling a financial product.

“In many ways the financial disasters of the past have been caused by financial product salespeople selling questionable strategies that would be unlikely to happen under properly constructed and regulated financial products, provided to consumers at a reasonable cost,” Mr Hewison said.

ENDS

About Hewison Private Wealth:

Hewison Private Wealth is one of Australia’s largest independent wealth management firms, specialising in high end financial planning and investment advice to Australian individuals and families, portfolio management, and Self Managed Superannuation Fund administration. The firm manages around 900 individual client investment portfolios currently valued at $600 million, of these investment portfolios around 500 are Self Managed Superannuation Funds.

Hewison Private Wealth is a fee based firm which does not accept commissions of any kind. It pioneered Individually Managed Accounts in the early 1990’s and its clients’ investments portfolios are structured in this manner with investment portfolios consisting predominantly of direct investments diversified across the five main asset sectors.

Established in 1985, the firm has over 25 years’ experience in providing clients with unbiased and strategic advice tailored to their individual requirements and for the ongoing management of their financial affairs.

For more information visit: www.hewison.com.au.

Media contact:

Lauren Knight – Account Executive, Buchan Consulting

03 8866 4722 / lknight@buchanwe.com.au