‘Canberra bureaucrats’ should leave advisers alone: AIOFP

In a letter to members, Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston said the financial advice profession should be able to function with minimal interference from government, resolving their own issues and seeking outside assistance only when deemed necessary.

“It is time for the financial advice industry to be treated in the same manner as the legal and accounting professions where minimal interference from Canberra bureaucrats or politicians is tolerated or desired,” Johnston said.

“Internal issues are normally quietly resolved or, where necessary, the courts get involved to decide the outcome without a politician or bureaucrat in sight.

“Financial advisers should be permitted to use their professional judgement when dealing with clients and Canberra bureaucrats should be held to account for their professional judgement when dealing with our industry.”

On 2 April, the Compensation Scheme of Last Resort (CSLR) officially launched, putting advisers out of pocket almost $1,200. Johnston said with the CSLR now in place, the Australian Securities and Investments Commission (ASIC) can focus on reducing misconduct in banks and super funds.

“With the CSLR now activated and the consumer-friendly Australian Financial Complaints Authority (AFCA) effectively overseeing the advice industry from an advice quality perspective, ASIC can then turn their attention onto the product manufacturer/institutional space where most of the problems over the past 40 years have occurred for consumers,” he said.

Highlighting the impact institutions’ poor behaviour has on the financial services industry, Johnston said advisers are often left copping the blame for wrongdoings as institutions buy their safety through political donations.

“You only need to look at the AFCA annual report where over 95 per cent of consumer complaints are against the institutions and they are 100 per cent responsible for the $40 billion of failed funds over the past 30 years,” he said.

“Institutions are continually avoiding accountability over their conduct by spinning the blame onto the financial advice community and making large donations to political parties to mitigate negative outcomes.

“Like most times when Canberra gets involved with policy outcomes, it is a poorly managed process and the taxpayer is left with the cost.

Johnston added that politicians often continue to work in government longer as they wait to secure alternative employment due to the lack of a pension, potentially causing more harm than good.

“The calibre of politician has markedly diminished over the past 20 years since the parliamentary pension fund was abolished (October 9th 2004) and all political parties have had difficulty recruiting the best minds into seats,” he said.

“This is a critical issue facing Australia’s democracy going forward.

“Around 10 per cent of politicians are currently in the old pension scheme, the rest are on the dole if unseated. Morrison was a classic example of no pension and a Sydney lifestyle to maintain, he could not give up his seat until an offshore job emerged.”