Macquarie rejects statutory compensation scheme
A statutory compensation scheme for victims of financial adviser misconduct would threaten the rigour of the sector's regulatory system, forcing well-managed licensees to bail out those who failed in their obligations, Macquarie Private Wealth believes.
The firm used its submission to the Senate Economic Committee's inquiry into the scrutiny of financial advice to reject the idea of a rebalanced compensation scheme and expressed fears it could destabilise the sector's efforts.
Macquarie said the premise could represent a "regulatory moral hazard by reducing incentive for stringent regulation or rigorous administration of the compensation arrangements".
It would also place the onus on some licensees to bail out others, it said.
In its submission, Macquarie also stressed financial advice firms must be given sufficient time to embed regulatory changes.
"Frequent changes to the law increase uncertainty, reduce confidence, and through higher costs, make the business of providing financial advice more marginal," the submission said.
It further said the success of the Future of Financial Advice (FOFA) reforms would hinge on increasing consumer confidence and industry professionalism, while driving down compliance costs for providers to keep the space competitive.
Macquarie said its parent company has spent almost $49 million over two years on FOFA and EU compliance costs.
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