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Moves to improve standards within the financial advice industry are effectively shutting average Australian households out of advice because the measures are pushing up adviser costs.
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Rising red tape limiting financial advice
21 October 2014
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Chris Kennedy, Wealth Advisory director at William Buck, said an ongoing appetite for regulation is working against those it is designed to protect.
Mr Kennedy warned that a fixation on legislating to improve adviser competence is pushing advice out of reach of the average person.
“One of the things that FoFA was designed to do was make sure the ‘little guy’ would have access to advice, but what it has actually done to a degree is cut them out because the burden of the legislation has pushed up adviser costs,” he said.
According to Mr Kennedy, the appetite for regulation of the industry was being driven by the actions of a few bad advisers, with good advisers and consumers paying the price.
“Within big institutions where there is a vertically integrated model there are conflicts, but that doesn’t reflect the industry as a whole,” he said.
“For every bad story there’s 100 good ones and we don’t need another layer of legislation to tell us how to look after our clients."
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Mr Kennedy highlighted education, which was flagged in David Murray’s interim report as a key issue for the industry, calling for higher minimum standards for those offering financial advice.
“Education is important because it gives the public confidence,” he said.
“At the current time, people are qualified to give advice once they have a RG146 qualification. That basically means once they complete four subjects in financial planning they are qualified to give advice.
“There needs to be a higher minimum of level of education required as an industry standard. That’s where the focus should be if you want to lift the quality of advice,” Mr Kennedy said.
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