Frontline bank staff should be incentivised to provide general advice to customers as it would enhance the customer-centric goals of the Future of Financial Advice (FOFA) reforms, an ANZ Wealth executive said yesterday.
“We believe that people should be able to attain affordable advice from a range of sources across the financial services industry,” ANZ Wealth general manager of advice and distribution Paul Barrett told a Parliamentary Joint Committee (PJC) hearing on the FOFA reforms in Sydney.
“Banks are in a strong position to provide that advice to people in the community.
“We would like to incentivise our staff to have this important conversation. Under the measures in the bills, we cannot.”
He said under the current draft of the bills, the opportunity to provide simple, low-cost advice to a large number of Australians would be lost.
“A person could walk into that bank branch and have their financial needs addressed in a relatively seamless way,” he said.
Opening a term deposit would be a prime example, he said.
“In a conversation that included the provision of general advice, bank staff could discuss with the customer the differences between establishing a term deposit within superannuation compared to the same facility outside of superannuation,” he said.
“In this example, the staff member has provided general advice, enabling the customer to make an informed choice about their financial affairs.”
He said a balanced scorecard approach to training, monitoring and incentivising ANZ frontline staff would enable more consumers to receive quality advice.
In response to Barrett, PJC chairman Bernie Ripoll said his understanding of the reforms was that there would be more scope in the banking space.
“This reform will actually give you more capacity within your bank to provide the products and services you sell,” Ripoll said.
Barrett clarified his point: “What we’re asking for is that the conflicted remuneration component of the legislation to be relaxed and we’ve asked for a carve-out to enable us to incentivise those conversations.
“If we were able to have this remuneration to take place, much more general advice would be dispensed.
“It’s a great opportunity for banks to provide a response. The current conflicted remuneration ban makes it difficult for them to achieve that.”
Barrett also commented on the transition provisions that would assist ANZ to make an orderly change to the new regime.
He said the implementation of FOFA would require significant systems and administration changes.
“In our assessment, these are as significant as FSR (financial services reform), which had a two-year transition period,” he said.
The tight 1 July 2012 compliance deadline posed a risk with regard to too many of the proposals, he said.
“FOFA can also not be viewed in isolation. The industry is also facing a substantial program, including, but not limited to, the introduction of MySuper, Super Stream proposals, new shorter PDS (product disclosure statement) requirements and new governance standards,” he said.
“We’d like to highlight the efficiency gains that could be achieved in aligning the compliance date for the ban on conflicted remuneration with the 1 July 2013 start date for MySuper.”
