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A rash of new arguments has erupted within Australia’s financial planning sector. No surprises there. As an industry built on divergent business models and a patchwork quilt of legacy issues, the financial advice industry has always had plenty to debate.
The rhetoric intensified to such a degree in the days following the passing of the FoFA legislation through parliament that one could be excused for thinking a life or death moment had hung in the balance.
Why the emotion?
Was it because a majority had assumed FoFA would not get up? That the FoFA Bill’s drafting was an inevitable non-event as potential legislation? How else do we explain the reaction to its ultimate passing through the Lower House, which appeared to take all but the people closest to the negotiating table by surprise?
Actually, nobody should be surprised by any developed nation whose Government is taking a hard look at the regulation of its financial services and advice sectors. The 2008 global financial crisis is the common denominator – the GFC sparking the spread of financial regulation that in 2012 has attained global, pandemic proportions.
Like Australia, the Governments of Britain, Canada, Singapore, Norway, European Union and others including the United States and, yes, New Zealand have begun, or are in various stages of, finalising their own versions of FoFA.
Players within our domestic financial advice and services industry might feel like the singled out, sole targets of a socialist conspiracy. But the reality is that consumer-led protectionist laws are in fact the norm – not only here in the Southern hemisphere – but the world over. Such measures have the common goals of improved transparency, greater disclosure about the nexus between advice and product sales/ remuneration and acting in the best interest of the investor.
Sound familiar?
Take a look at journalist Helen Burggraf’s excellent report at International Adviser magazine.
Reputation threat or opportunity?
I am in the latter camp. Of course the regulatory environment is an opportunity to overhaul the reputation of an industry that cannot escape being inextricably linked to the brand names of financial collapse and investor degradation – Storm, Trio, Westpoint et al. Arguments about the rights and wrongs of FoFA might continue. But nobody can argue about the need for quality financial advice delivered by people not only motivated to do the right thing but also governed for the same outcome.
It’s a turning point.
