MenuThe Financial Planning Association of Australia (FPA) has submitted recommendations to the Productivity Commission’s inquiry into competition in the Australian financial system, designed to help enhance innovation, choice, efficiency and the quality of financial advice services for consumers.
The recommendations cover a number of areas relating to the unique financial advice market. These include issues with the regulatory environment, the disparities between advice and product businesses, and the current inconsistency of regulatory treatment across professions that hinder the price, service quality and innovation benefits of competition.
Commenting on the submission, Ben Marshan CFP®, Head of Policy and Government Relations at the FPA, said the issues impacting on competition in the financial advice market are unique and must be addressed to deliver the consumer benefits of competition in the financial advice market.
“Competition is essential to drive improvements in the quality and value of advice for consumers. These positive consumer outcomes can only be delivered by addressing the problems that impact financial planners’ ability to compete in in the financial advice market,” said Mr Marshan.
The FPA recommends the Productivity Commission consider issues that impact on competition in the advice market, separately to other financial services markets. These issues include:
- The cumulative effect of regulatory costs on the viability and sustainability of advice licensees, and the need to ensure effective regulation is balanced with the need to stimulate market competition.
- The extra complexity and cost associated with having multiple regulators, compared with the pros and cons of a monopolistic regulator for financial advice.
- The impact constant changes in the regulation of advice have on the financial planner’s ability to focus on listening to clients and improve the quality of advice for consumers.
- The lack of accountability on product manufacturers for products that do not meet their stated objectives, combined with the availability of comparable transparent product information, and the difficulties this creates for financial planners when trying to identify and explain suitable options for each client.
- Financial planners, including our CFP® and Financial Planner AFP® members, to be given the same standing as members of other professions and professional bodies.
- Tax deductibility of financial advice to help offset the continually increasing cost of regulation. This will ensure access to advice remains affordable for all Australians to better their financial position.
“In our submission we highlight what the primary considerations should be when identifying the appropriate level of regulation versus the consumer benefits of competition. The wrong kind of regulation might see small licensee businesses become less price competitive than their counterparts who are aligned to large licensee businesses. There is a risk that small licensees will be priced out of the market and the number of advisers will fall as a result,” added Mr Marshan.
