Reform revolution an opportunity to improve trust

The current reform revolution is a once-in-a-generation opportunity to get it right and improve trust in the industry, but several proposed changes risk taking the reform agenda too far, according to Financial Services Council (FSC) chief executive John Brogden.

Brogden said that Australia was about to undertake a revolution in financial services, and that the FSC’s objective on behalf of the industry was to ensure it was a managed revolution that delivered a better industry with better outcomes for consumers.

The FSC was guarded against reforms that overcompensated for previous mistakes, and only about 80 per cent of the current Future of Financial Advice (FOFA) and Cooper Review reforms were good ones, he said.

While praising SuperStream and the abolition of commissions on superannuation and investment products, Brogden was again critical of MySuper and the opt-in proposals, suggesting an opt-out approach would be ideal for the adviser-client relationship.

The current round of reforms “will lead to better financial advice that will be delivered with greater integrity under a fiduciary relationship,” Brogden said.

“[Advice] will almost certainly be more expensive and as a consequence fewer people will receive it. If the outcome of all of this is fewer Australians receiving financial advice, that is a bad outcome,” he said.

Brogden also called on the Government to make financial advice tax deductible.

After the current round of reforms it was critical that a relationship of trust between consumers and the industry be established, he said.

Brogden praised moves by the Financial Planning Association (FPA) to increase the professionalism of the sector over the next five to 10 years.

There was a high level of uncertainty delivered by a hung parliament, but also a good agenda for positive reform, he said. But this reform could be undone by proposals that could make financial advice more expensive and dumb down superannuation, he added.

Despite this, Brogden said he believed in a positive future for the sector and said the FSC was excited about the opportunity to establish a relationship of trust between the industry and consumers.