Canadian insurance guru questions FOFA's intent
Canadian financial planning and life insurance expert Bruce Etherington has compared Australia's current round of Future of Financial Advice (FOFA) reforms to previous experiences in Canada and questioned whether the changes are really likely to benefit the consumer.
Etherington is on a speaking tour of Australia as a guest of Asteron, running workshops aimed at highlighting the value of building trusting relationships with clients, particularly in a risk insurance situation.
It's not necessarily that advisers are lacking in those skills or an appreciation of relationship building, but that around the world excessive compliance requirements have eaten up an increasing amount of advisers' time over the past couple of decades, Etherington said.
Financial advisers want to comply with the law but it is also incumbent upon governments to ask who they are really serving when they enact compliance legislation that causes advisers to have to spend more time with paperwork and less time seeing people. This could mean fewer Australians receiving advice, leading many to be woefully undercapitalised at retirement and a greater drain on the public purse, he said.
"If I was an adviser in Australia I would be raising the question with government: who are you really helping?" he said.
Advisers should raise that question with their customers, the marketplace and consumers groups, and if they can convince the consumer that FOFA is not in their best interests they can create a groundswell that members of parliament have to pay attention to, he said.
In Canada in the past when the government has tried to make draconian changes advisers have had lobbying success by focusing on whether those changes will help or hurt the consumer, because if you tell the government how it is hurting the adviser that is too self-serving, he said.
For example the elimination of commissions from financial assets will mean only wealthy Australians who can afford to write a cheque for fees will be able to afford professional advice in the future, he said.
"This legislation is not going to encourage people to seek more financial advice," he said. "How is this move helping the Australian consumer? How is it helping the widow or the employee or charities? It isn't.
"I'm just a visitor, I'm making no judgements, I've been asked to make observations given a similar Canadian experience," he said.
Recommended for you
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
The Senate economics legislation committee has recommended Schedule 1 of the Delivering Better Financial Outcomes legislation be passed as it is a “faithful implementation” of the recommendations.
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
