AIOFP calls ‘authors’ of first tranche of draft law ‘tone deaf’

In its submission to government, the Association of Independently Owned Financial Professionals (AIOFP) accused the “authors” of the first tranche of being “completely tone deaf” to events that have transpired in financial advice over the past nine years.

“How many more suicides, broken marriages, lost life savings and widespread mental health problems does Canberra want?” the body wrote.

The AIOFP explained that while the Hayne royal commission’s recommendations centred on curtailing banks and institutions from their “repugnant” fee for no service behaviour, advisers bore the brunt of “unnecessary and expensive compliance impositions”.

“Mysteriously”, the body opined, this tranche of draft legislation gives “immense power” back to “many” of the conflicted institutions.

“This tranche document now inexplicably/bizarrely wants to give the trustees of some of these institutions total power with deciding whether an advisers fees are suitable or not for an adviser’s client,” the AIOFP said.

“Many of these trustees are not trained in financial advice applications, how can they make decisions on a family’s circumstances and the appropriateness of a fee if they have never met the family or analysed their circumstances?

“This defies common sense and provides just another layer of quasi-regulation and costs consumers will ultimately have to pay for.”

Referring to the government’s focus on financial advice over the past year and a half as “preposterous overreach”, the AIOFP called for it to end.

“It is time for all politicians and Canberra bureaucrats to commence treating the financial advice community with the respect it richly deserves, we are now officially classified as a profession and demand to be treated no differently to any other comparable entity.

“The overreach by government over the past 10 years into advice is like no other jurisdiction on earth.”

Digging into the recommendations that form this first tranche of legislation, the AIOFP said that the government’s proposals don’t reach far enough in ensuring protection for consumers.

Namely, on the ongoing fee arrangement front, the body said that while the intention to consolidate annual fee consents into a single document is “welcomed”, “such annual forms are not necessary and fail any reasonable test on the basis of consumer protections or information”.

“These forms merely add to the increased costs of advice. Collectively, they should all be abolished,” the AIOFP said.

“The authors of tranche one must understand that even clients are complaining about the duplication, red tape and direct costs involved – unfortunately, this document addresses no reduction but actually wants to increase it with risk advice consent forms,” the body continued.

Referring to the advice community as a “regular scape goat” for “incompetence of other stakeholders”, the AIOFP signed off its submission by asking Canberra to “finally do something about it”.

The closing date for stakeholder submissions in response to the first tranche is today, 6 December.