Low licensing, education standards damaging industry: AMP

The standards for Australian Financial Services Licence (AFSL) holders, as well as minimum education and qualification standards for financial planners, must be increased, according to AMP.

In its submission to the Parliamentary Joint Committee inquiry into the financial services industry, AMP has argued for more stringent standards in the licensing process.

The group said there are “clear deficiencies in the AFS licensing regime that result in inappropriately resourced and insufficiently competent operators [being able] to obtain an AFS licence”.

AMP’s submission also urged decisive action on adviser qualification standards.

The group believes the current low education entry level for advisers is a “significant contributing factor to advisers providing advice on products that they do not fully understand”.

The group said that existing minimum qualification and experience standards for financial advisers are inadequate, and should be raised.

AMP also believes the existing financial requirements for licensees should be increased, arguing that all licensees be required to maintain a minimum level of net tangible assets, a move AMP said would serve to better protect consumers.

Those at the big end of town are using their submissions to the inquiry to promote specific aspects of their models that smaller AFSLs cannot replicate.

AMP has asked the committee to recognise the “higher level of protection” offered by an integrated structure, in which advisers are backed by a large institution, with all that entails in regards to systems, balance sheet strength and the importance of brand and reputation.

The group said the “failures at the centre of the inquiry were independent, boutique financial services institutions, not backed by large institutions such as AMP”.