More calls for legislation to distinguish 'strategy advice' from 'product advice' planners

Legislation is required to ensure consumers can distinguish between planners providing ‘independent strategy-driven advice’ and those providing ‘product sales-driven advice’, according to the Boutique Financial Planning Principals Group (BFPPG).

This was one of five recommendations submitted by the BFPPG to the Parliamentary Joint Committee on Corporations and Financial Services Inquiry into Financial Products and Services.

BFPPG president Claude Santucci said the consumer would be better served by “clear, legal definitions that make the distinction between institutionally owned, product sales-driven advice and independently owned, strategically-focused advice.

“Currently, it is very difficult for consumers to identify whether they are dealing with a financial product salesperson or an independent financial planner committed to putting their interests first.

“There is ample evidence that financial product salespeople hold themselves out to be independent in a misleading manner so as to make it easier to make a sale,” he said.

Another key BFPPG recommendation was that the Government should “encourage all stakeholders to help Australians achieve financial independence in their retirement by ensuring a level playing field in which the consumer benefits from competition, choice, and value for money”.

A number of initiatives were listed by the BFPPG to achieve this recommendation, including easing the compliance burden on planners, ensuring clients can move between platforms without incurring significant expense or a tax liability, and allowing a tax deduction for financial planning fees.

Yet another key recommendation was that a professional standards board (PSB) should be established to set the standards of behaviour, ethics and conduct of the profession, and that financial planners must be registered to the PSB and be required to adhere to its standards.

Education and competency standards would be transferred from the control of licensees to the PSB, and use of the term ‘financial planner’ would be restricted to those who are registered to the PSB.

This latter recommendation for a PSB mirrors a recommendation submitted individually to the inquiry by BFPPG board member Bruce Baker earlier this week, and reported by Money Management.