AFA calls for review of EDR and PI


The Association of Financial Advisers (AFA) has urged that the Government's Financial Systems Review (FSR) include an examination of the external dispute resolution processes impacting financial planners as well as the role of professional indemnity insurance.
In a submission to the Treasury dealing with the terms of reference for the review, the AFA has also raised the possibility of reviewing "the positive and negative implications for consumers of the emergence of a very active direct insurance market".
However it is the AFA submission's reference to external dispute resolution processes and the role of professional indemnity insurance which is likely to resonate most with financial advisers in circumstances where concerns have been expressed about the performance of the Financial Ombudsman Service (FOS) and both the accessibility and affordability of professional indemnity insurance.
The AFA submission calls for "a review of the effectiveness of the AFSL External Dispute Resolution framework and the availability and affordability of professional indemnity insurance".
Elsewhere in the AFA submission, the organisation references the "interplay of the Corporations Act and state-based Payroll Tax obligations due to the apparent inclination of the states to view self-employed financial advisers, operating under an AFSL licensee, as an employee in certain circumstances".
It also suggests a review of the definition of "personal advice" versus general advice in the context of the significantly different obligations that apply to each scenario in terms of the provision of advice.
Recommended for you
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
A $3.5 million settlement for victims of Melissa Caddick has been approved by the Federal Court following an initial agreement last December.
The Reserve Bank of Australia has delivered its first rate decision since the introduction of a new board structure last month.
Digital advice provider Otivo has launched an interactive tool, powered by artificial intelligence and Otivo’s own advice engine, to help answer client questions.