Consumer teams have warned a proposal to decontrol basic recommendation would take away protections similar to entry to unbiased complaints decision and sideline the Australian Securities and Investments Commission (ASIC).
The teams additionally say proposed reforms might gas poor high quality recommendation by vertically built-in establishments and “incentivise main banks, insurance coverage corporations and superannuation funds to offer conflicted gross sales pitches dressed up as recommendation”.
The submission in response to the Quality of Advice overview proposals paper says in essence the present mannequin requires basic recommendation suppliers to carry an Australian Financial Services Licence.
“This in flip gives a variety of necessary protections, together with the requirement to have an inside dispute decision course of and be a member of the Australian Financial Complaints Authority (AFCA),” the submission says.
“Most importantly, it permits ASIC to take a broader vary of actions in opposition to unlicensed individuals who search to spruik merchandise.”
Choice, the Consumer Action Law Centre, Financial Counselling Australia and the Financial Rights Legal Centre warn a “watering down of the perfect pursuits obligation to an obligation to provide good recommendation”, will push monetary companies regulation again a long time.
Quality of Advice reviewer Michelle Levy has argued the present division between basic and private recommendation creates issues and together with the perfect pursuits regime just isn’t working for customers or advisers.
Proposals embody widening the scope of private recommendation, not regulating basic recommendation as a monetary service, and decreasing written documentation to chop complexity and cut back prices. An obligation to provide “good recommendation” would concentrate on outcomes slightly than a prescriptive course of, the overview paper says.
The client teams recognise monetary recommendation disclosure limitations however say, designed accurately, paperwork can help shoppers, and supply an necessary paper path if something goes incorrect that may be taken to AFCA or the courts.
“It is important that customers obtain recommendation in writing. We disagree with the overview’s ‘question whether or not customers need written recommendation in any respect’,” the submission says.
Consumer teams suggest that the overview advocate the event of a “consumer-tested, performance-based disclosure regime” that will concentrate on areas similar to client comprehension.
The submission reiterates their name to ban remaining types of conflicted remuneration, together with eradicating the final insurance coverage exemption to the ban. The problem, nonetheless being thought of, wasn’t included within the proposals paper, however no additional public session paperwork are anticipated earlier than the overview concludes.
Submissions on the Quality of Advice proposals paper, closed on Friday. The last report is because of be delivered to the Federal Government by December 16.