ASIC and the FPA have been challenged to take a stronger stance on commissions.
Commissions in the financial services industry must be banned, former FPA chair and Hewisons and Associates chief executive John Hewison has said.
"In a perfect world ASIC would ban commissions and the FPA would do likewise," Hewison said. "But the reality is that the regulator won't take on the big end of town, so the FPA needs to step up and take a firm stance as the rightful guardian of the profession and surrogate protector of the consumer.
"There's no doubt that it would be a gutsy move for the FPA as there would be a huge backlash from the institutions that have a foot in both camps. But in my view the FPA would weather that storm, and come out of it with an even higher standing because the community would know it fought for their right to untainted financial advice."
Financial disasters like Fincorp and Westpoint that cost investors millions of dollars would be much less likely to happen if there were no commission incentives for advisers to recommend them, according to Hewison.
"Clients don't want advice tainted by product bias, conflicts of interest, or sales commissions," he said.
Hewison acknowledged there are many legitimate planners using the commission system, but claims the regime is still indefensible because individual planners can't opt out of the systemic influence of incentives on behalf of their clients.
Hewison believes the integrity of the financial advice profession needs to be addressed by both regulators and the profession.
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