FPA chief executive Mark Rantall, chairman Matthew Rowe and general manager for policy and conduct Dante De Gori fronted the Senate Economics Legislation Committee inquiry into the FOFA amendments in Canberra yesterday.
Labor Senator Mark Bishop asked the FPA representatives to put on the record the nature of its membership and membership fee income, as well as “any licensing, partnership or commercial arrangement that [the FPA] has that results in fee income”.
Mr Rowe framed his response by pointing out that the FPA went through a “constitutional change” in 2011 which means that only individual financial planner practitioners can hold membership of the organisation.
“The ‘natural person’ is the only one who can have voting rights,” he said. “Our constitutional change states very clearly that only individual practitioners can be members, because we believe that ethics rests with natural people – a person or an individual – not through the corporation, of any size.”
As for member fee income, Mr Rowe referenced the FPA’s Ernst & Young-audited 2013 annual report, which records total revenue of $9.57 million.
“Do we have the resources – without the interference or influence from others – to be able to run a professional body? Yes we do,” said Mr Rowe.
“We generate more than enough money out of our membership revenue and our membership fees to cover the entire operating costs of our operation,” he added.
That includes the FPA’s conduct review commission and education and standards operations, which are “quite expensive”, said Mr Rowe.
The 2013 FPA annual report shows that member subscriptions accounted for $6.93 million of member revenue for the year.
The report also shows that the organisation had 10,541 members at the time, of whom 5,503 were CFP practitioner members.
Mr Bishop asked whether financial planners employed by “big banks” and “big financial houses” were also members of the FPA.
“Yes, as are employees of industry superannuation funds; as are people like myself who have their own licence and would deem themselves independent and self-employed; as are those who operate their own business but might be operating through a franchise licence of a bank or [an institution],” said Mr Rowe.
“Our membership represents the demographics of financial planning in Australia across the board.”
The FPA also took the opportunity while in front of the Senate committee to release the association’s FOFA white paper detailing its ’10 Point Plan’.
The plan sets out to raise the minimum criteria for financial advice in Australia; amend the law so ASIC can approve professional bodies; establish a ‘financial planner education working group’; define and then ban the term ‘commission’ under the general advice exemption; rename general advice ‘general or product information’; implement a co-regulatory system in Australia; establish a public register of financial planners; give ASIC suspension powers of financial planners; make financial advice tax-deductible; and lift the criteria of a ‘sophisticated investor’.
