Advisers back royal commission with teeth

In the aftermath of the royal commission’s second hearings, ifa ran a straw poll seeking feedback from readers on the inquiry’s approach and whether commissioner Kenneth Hayne and counsel assisting struck an appropriate chord.

Of the 1,456 responses to the ifa survey, 41.2 per cent of readers said that their assessment of the royal commission so far is that “it has been fair”.

An even greater cohort (47.9 per cent) responded that the Hayne commission has been “too lenient”, indicating they would support an even tougher approach from the commission in terms of its line of questioning and recommendations. 

Just 10.9 per cent of respondents believe the inquiry has been “too harsh”.

The findings come despite suggestions that evidence before the royal commission may result in significant further reform of the financial advice business model, with major implications for practitioners.

Both ASIC and the FPA have argued in responsive submissions to the royal commission that grandfathered commissions should be banned in the near term, despite the official carve-out under the FOFA legislation.

Counsel assisting the royal commission Rowena Orr QC has also asked public questions about the appropriateness of the traditional dealer group model and operational model of the financial advice associations, indicating reform of these influential service providers may also be forthcoming.

Support for a tough approach from the royal commission also comes alongside noises that many advisers are seeking to change their current licensing arrangements or leave the industry.

In an article for ifa, M&A and licensing consultant Steve Prendeville revealed that his business has received a significant uptick in inquiries from firms looking to either leave an institutionally-aligned licensee to become self-licensed or join a more independent group, or leave the industry entirely.

Bell Potter Securities analyst Lafitani Sotiriou has also predicted greater movement away from instituitionally-aligned channels in the wake of the royal commission.

The royal commission is currently gearing up for its third round of hearings on small business lending, following the release of supplementary submissions from witnesses that appeared during the second round.

The royal commission is expected to hand down an interim report by 30 September 2018 and a final report by 1 February 2019.