AMP-aligned firm calls for monitoring overhaul

In a submission to the Life Insurance and Advice Working Group – in response to the interim Trowbridge report – South Australian practice Enva argued that the current dominant model of corporate licensing should be replaced.

“There is an unhealthy conflict caused by the licencing system,” the submission said. “AFSL holders have a financial incentive to cover up poor advice and provide support to advisers who struggle with compliance.

“The best way to improve quality of advice is to start by requiring advisers hold a membership with a professional body and if they are exited from that professional body or suspended from it, they should not be able to practice.

“This should be the first step along a path that shifts the license status away from product manufactures to professional bodies – one the FPA and another the AFA,” the submission said.

Enva argued that these professional bodies should then take over the compliance and oversight capabilities of a licensee.

However, the firm added that dealer groups should still exist and that “vertical integration provides great benefits from a system and technology perspective”.

“With professional bodies in charge of the licencing of advisers you would eliminate the “phoenix problem” of low quality advisers shifting dealer groups to avoid prosecution,” it said.

The submission also argued that the requirement for a degree for financial advisers is “simply overkill”, highlighting that advice is “not that complicated”.

“The position is primarily a relationship manager using the resources and research of dedicated specialists,” the submission said.

“Advisers don’t need to know all the answers, they just need to know where to find them."