Joint remedy needed for industry ailments
The financial services industry has deep conflicts of interest and structural problems that fund managers and financial planners must seek collective solutions to, according to Australian Consumers’ Association chief executive Peter Kell.
“Some issues must be confronted on an industry wide basis, but for companies to do this on their own would be commercial suicide,” Kell told a delegation at the Investment and Financial Services Association (IFSA) conference on the Gold Coast last week.
Kell also argued that disclosure on its own would not restore consumer confidence, despite the industry held view that transparency will solve all its problems.
“For consumers, confessing your sins is not really what they want to see, they’d like you to stop committing them in the first place,” Kell said.
“If the industry doesn’t come to the party, regulation could be the only answer. If the gridlock isn’t broken, consumer trust will continue to be eroded.”
However, Kell added that consumers wanted to trust the financial services industry, and that recent efforts by the industry to recognise the problems and work together on solutions had been pleasing.
ING chief executive Paul Bedbrook, also speaking at the conference, commented that the industry was not sufficiently self-regulated, and has now taken over from the banks as the “primary target for insult” by the community.
Bedbrook said going forward “we need to migrate to self-regulation or we will be dictated to by public stakeholders”, which include groups such as politicians, consumer groups and commentators.
Bedbrook also defended the role of advisers in the financial services value chain — saying that while removing advisers would eliminate the ‘sales’ problem, consumers are also at risk of not being able to access the products they need.
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