The FSC yesterday laid out the details of its proposed Advice Competency Standards Board – a statutory body that would oversee the education of financial advisers.
But according to ISA chair Peter Collins, the proposal is mere "window dressing".
"Following an extraordinary lobbying campaign by the banks and financial advisers, the FOFA Bill currently before the parliament gives the banks and advisers their wish-list at the expense of consumers," Mr Collins said.
"The banks now recognise they went too far and have lost the support of the Australian public. Consumer trust in the financial advice industry is now in tatters," he said.
The Financial Planning Association (FPA) has also rejected the FSC's proposal, arguing it would potentially embed inherent conflicts rather than eliminate them, given that the proposed board would be funded by industry members.
"[The proposal] asks the government to do the industry's job of setting appropriate professional and educational standards (rather than establishing a regulatory framework and minimum standards and enforcing them)," said the FPA.
FPA chief executive Mark Rantall said the FSC proposal was a "band-aid solution" that "masks the underlying, systemic issues".
"We don't need a new board to oversee the Australian financial advice industry. What we do need is long-term, effective change that is transparent," Mr Rantall said.
"This model gives up on self-regulation, but creates more red tape. Removing the self-responsibility of advice businesses to do their best by consumers is not a solution."
