FoFA legislation represents an attempt by the government to address some of the issues relating to the delivery of financial advice in Australia, but it does not go far enough. The entire structure of the financial advice profession and the allied financial services industry needs to be addressed, with a complete separation of professional advice and financial product manufacture.

The amendments outlined in the 10 Point Plan aim to raise the standards in the financial planning profession – which Australian consumers need and deserve.

The argument from financial institutions stating consumers will have to pay more for advice due to increased compliance costs is unjustified. The reality is simple, financial structures and products do not necessarily require complex advice mechanisms or multi -tiered service provision. The separation of advice and product will lead to prices decreasing where each service or function charges separately and appropriately for the service it provides. At the moment, there are too many “snouts in the trough,” charging for services that are not delivered or paying incentives that are not deserved.

By way of comparison, if you have mild headache or a cold you would go to the chemist and buy an off-the-shelf medication. If you have a serious or complex health issue you would consult an appropriate medical professional. Financial planning advice and/or product provision is a similar proposition and this should to be recognised by the legislator. The FPA 10 Point Plan does just this.

The 10 Point Plan also raises the minimum criteria of a financial planner/adviser. It states such an individual must have membership of an ASIC approved professional body, hold a relevant university degree plus a minimum of three years’ experience over a five-year period, and complete a certain amount of professional development.

The notion that anyone without an appropriate education level and experience can adequately advise someone on their entire financial structure and future life strategy is inappropriate. Australian consumers need the assurance that when they seek the advice of a professional financial planner or adviser, they can expect an appropriate level of expertise that they can trust. The FPA solution achieves this distinction.

If you have any questions in relation to the FPA 10 Point Plan, please consult your adviser.