Treasury's decision not to adopt a recommendation to form an overarching organisation to cover the entire financial services industry is the main omission from the proposed Future of Financial Advice (FOFA) package, according to Parliamentary Joint Committee (PJC) chair Bernie Ripoll.
"I accept the overall package, but the main one that was not included from my perspective was the formation of a one-stop umbrella organisation to cover the entire sector," Ripoll, who is chair of the PJC on Corporations and Financial Services, said in a recent interview with law firm Henry Davis York.
"The view was that we were not ready for that and that there were already a number of organisations dealing with that issue," Ripoll said.
He said he also would have liked to see the inclusion of better transparency in terms of the ownership of financial advisory firms.
"I had also wanted measures introduced to make it clear what particular advisory businesses were - who controlled them and the like," he said.
"That should be made clear on their business cards and in their marketing material so that people know the relationship between the people selling the product and the ones supplying it."
But overall Ripoll said he was happy with the recommendations that had made it into the FOFA bill currently under review and he put particular emphasis on the fee-for-service recommendations.
"The changes related to conflicted remuneration and the best interests test are, in my view, essential. There's always room for negotiation, but we need to have broad support on these points," he said.
He said he hoped the introduction of the legislation would lead to more people taking a greater interest in their retirement savings and investments and having a good understanding of risk.
"Risk is the biggest issue, because people need to know how much risk they are prepared to take," he said.
"Many people don't know that if they take 100 per cent of their savings and borrow another 100 per cent and put that into an investment, that is not diversified, that they have increased their risk.
"That is what we have seen people do in cases like Trio [Capital], and they have lost all of their money. The fund may have said that their investments were diversified, but when the fund collapses people lose all of their money."
There was a gap between "expectations and understanding", he said.
"In 10 to 15 years' time, I would like to think that we have become more sophisticated and understand what real risk is," he said.
