Advisers can’t be trusted says ISA
Just days out from the final report of the Royal Commission, Industry Super Australia (ISA) has told a key parliamentary committee that it should not be assumed that financial advisers can be trusted to give superannuation fund members advice on selecting post retirement products.
In a submission to the Senate Economics Legislation Committee, ISA pointed to both the Royal Commission interim report and the recent findings of the Productivity Commission to argue that it should not be assumed that retirees will be able to rely on financial advice in making their post-retirement product selections.
It stated: “In short, the current financial advice regime cannot be relied upon to protect consumers”.
“It might be argued that retirees will be able to make effective choices between different pooled products after 1 July 2019 by utilising financial advice,” the ISA submission said but then pointed to the Productivity Commission’s recent final inquiry report which it said “provides support for the view that the current regulatory framework for financial advice cannot be relied upon to connect retirees to the best income products”.
“It observes that: ‘Despite the Future of Financial Advice reforms, conflicted financial advice remains an egregious problem (especially within vertically integrated organisations)’,” the submission said.
The ISA submission said the interim findings of the Royal Commission had also “highlighted a number of recurring problems with advice provided by advisors employed or franchised by for-profit product providers”.
“In particular the Royal Commission found that the routine provision of advice that was in the best interests of the advisor and product provider – rather than the client,” it said. “FOFA has proven ineffectual partly because it does not actually require advisers to act on the best interests of their clients, permitting advisers to recommend in-house products when other products may be more appropriate.”
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
