Advice disputes should be taken out of the hands of the Financial Ombudsman Service and, instead, be handled under the auspices of professional associations, according the Boutique Financial Planning Principals Group (BFP).
The Boutique Financial Planners have made their point in the organisation's second submission to the Financial System Inquiry (FSI) arguing that "consumers should not be compensated for their own poor decisions".
"Product issuers have to be more accountable for both the mis-selling of their products by associated ‘advisers' and for product failures," it said. "Consumers have used free dispute resolution schemes to make financial advisers and their insurers responsible for product failures under the guise of ‘inappropriate advice'."
The submission went on to argue that the current arrangements should be re-worked to align them with other arrangements with the result that consumers could take product disputes to a "product dispute ombudsman" while advice disputes could be taken to the advisers' professional associations.
Elsewhere in its submission, the BFP argued that given low levels of financial literacy, consumers were unable to distinguish between information and advice, "and between general advice and personal advice, as defined by the Corporations Act".
It claimed the current "disclosure" based approach had proven to be ineffective in informing consumer investment decisions and that a clear distinction needed to be made between employees and agents of product issuers providing information about those products, and advisers making independent product recommendations.
"The BFP supports removing the term ‘general advice' and replacing it with Product Information, together with mandatory warnings that personal advice is not being provided and that the ‘best interests' obligations do not apply," the submission said.
