Parliamentarians sent ‘industry education piece’ ahead of Minister’s QAR update

The Association of Independently Owned Financial Professionals (AIOFP) has penned a letter to parliamentarians ahead of the release of the Minister’s views on the final Quality of Advice Review report, providing background information on the various players involved in the financial advice industry to “avoid any confusion”.

“Our objective is to give you the facts without any self-interest or bias involved – a very difficult task,” the letter, shared with ifa, reads.

According to the letter, the AIOFP sees the major players in the financial industry as the banks, financial institutions/wealth managers, industry super funds, and financial advisers, with the problem for consumers being that banks/product manufacturers have tried to do both functions, leading to major losses due to conflicted advice and failed products, known as vertical integration.

But despite this, the group said, while the Royal Commission found the banks guilty, leading to billions being returned to consumers, surprisingly, it also reported unfairly targeted financial advisers.

The AIOFP proceeded to rate the players in the financial advice industry, starting with the banks, which received a score of 1 out of 10 for both advice and wealth management.

“They should not be allowed to be a wealth manager or offer advice services with the exception of in-house staff being permitted to give information about in-house product – rating for advice 1/10, rating for wealth management 1/10,” the group said.

Proceeding to “other wealth managers that have aligned advisers”, such as AMP and Insignia, the AIOFP said they “must be forced to have full and clear disclosure about their conflicts allowing consumers to make an informed decision before investing”.

Regarding their rating, the AIOFP gave them a five out of 10 due to conflicts of interest in both their functions.

The wealth managers without aligned advisers received a rating of eight, while industry super funds, which the AIOFP accused of running a vertically integrated advice model, got an eight for wealth management and a one for advice.

Lastly, the AIOFP gave independent financial advisers a positive rating of at least 8 out of 10 based on an ASIC consumer survey and AFCA complaint numbers..

ifa understands that Minister for Financial Services, Stephen Jones, is due to release his QAR response imminently, having already held Michelle Levy’s final report for just under three months after it was submitted to him on 16 December.