Last week’s federal election failed to shed any light on the future of Australia, let alone where the industry will stand over the next three years.
As both sides of politics scramble to claim the votes, the financial services industry continues to chug along.
It is this point of continuing along that speaks volumes.
Amid such change, in the form of reforms and potentially at a government level, the industry continues to survive.
Despite much anticipation about the outcome of the Gillard and Abbott show, financial advisers are still providing advice, funds are continuing to flow in and out of platforms, and accountants are still crunching the numbers.
Nothing has stopped, which begs the question: does the industry need further government regulation or would self-regulation be enough?
Could the industry rely on its own associations to offer regulation?
The FPA and Financial Services Council (FSC) have already shown they are unafraid to push the industry, with bans on commissions for advice and superannuation.
The FPA has introduced its own ban on commission payments to financial advisers, with many of the large institutions doing a good job of attempting to outdo each other by transitioning to a fee-for-service remuneration model for their advice networks well ahead of the association’s 1 July 2012 deadline.
Of those who aren’t yet at the 100 per cent transition mark, many would say they are 70 per cent or above on the way there.
There are also those who believe in choice, with the Association of Financial Advisers (AFA) firmly believing it is up to the client and adviser to determine the remuneration model. The association is not on its own, with many advisers within the industry adopting choice when splitting their investment and insurance advice.
However, if industry self-regulation were to be achieved, there would likely need to be universal standards across the industry for it to work.
This brings up the question of an association merger. It would, on paper, make sense for the financial services industry, in particular the retail advice industry, to be represented by one voice.
At this stage, the FSC appears to be the pillar that could be that one voice, with associations such as the FPA and AFA joining it side by side. Perhaps a similar model to that adopted by the Financial Ombudsman Service could work?
FSC is the name behind the voice, with the FPA and AFA the group’s advice arms – split between straightforward financial advice and risk insurance advice.
As an industry participant, what are your thoughts on industry self-regulation? Would a merger of the existing associations into one body work for you?
