Some reforms unnecessary: Santucci

Some of the proposed reforms are either unnecessary or incomplete and will not fix the core issues facing the financial services industry, according to the Boutique of Financial Planning Professionals Group (BFPPG) principal, Claude Santucci.

Santucci supported the proposed ban in trail commissions, but suggested measures to be subsequently introduced if this aspect of the reforms is to go ahead.

“If the Government is serious about getting the cost down and making advice affordable for Australians, they should cut out the trailing commissions, but make sure that the management fees are accordingly reduced by the fund managers,” he said.

BBFG is also seeking more information from the Treasury on the opt-in arrangements, with Santucci arguing they would be unnecessary if advisers found a way to clearly distinguish active clients from those that require one-off transactions.

“If you sort out the relationships with your clients, create formal arrangements with them and combine that with disclosure, the Government doesn’t have to worry about opt-in — opt out arrangements,” he added.

Santucci also highlighted that the most effective way to fight the bad apples of the industry is the whistle-blowing approach launched by the Financial Planning Association (FPA) earlier this year, called FPA Confidential, rather than the restructure of remuneration methods.