The federal government needs to rule a line under the reform of the Australian financial services sector if the provision of certainty for investors is to be restored, Financial Services Council (FSC) chairman Peter Maher has said.
Speaking at yesterday’s FSC 2011 conference on the Gold Coast, Maher said the financial services industry has experienced “unprecedented uncertainty” over the past three years due to ongoing economic and political uncertainty in Europe, the United States and the Middle East.
Maher said as well as external factors, the ongoing uncertainty around the Future of Financial Advice (FOFA) reforms has also added to the degree of uncertainty and is “beginning to exact a price in terms of confidence” about the future.
“Once these changes are implemented we need the government to rule a line under major structural reform of our sector to provide certainty for Australia’s single industry,” he said.
“This is important because constant change to the rules governing superannuation create uncertainty for people wanting to save more, meaning they save less, or save in the way that does not maximise their retirement incomes.”
In the year to June 2010, discretionary contributions to superannuation funds were $670 million lower in real terms than in 2009, he said.
He said uncertainty around the rules governing financial advices also means investors will be less likely to seek financial advice.
Quoting KPMG research, Maher said individuals with a financial adviser save an extra $1590 each year (after the cost of the initial advice) compared to a similar individual without an adviser.
“The objectives of FOFA have always been to increase transparency and increase access to financial advice. Right now these reforms deliver transparency but at the risk of making advice less accessible and more expensive,” he said.
“It’s time for us to truly have conviction in what we stand for. It’s time for clarity in what we are trying to achieve, and it’s time for a renewed sense of confidence in our ability to deliver for our clients.”
