The Financial Planning Association (FPA) has released a new set of practice standards designed to ensure consumers will receive quality advice when they engage the services of a financial planner.
The new practice standards are the first of a series the FPA is intending to compile and have been formulated to allow consumers to better understand the service they can expect from a financial planner and how the advice process works.
Four practice standards have currently been released.
The Quality Client Engagement Standard has been issued to ensure both planners and consumers receive greater clarity over their obligations, expectations and rights in their professional relationship.
The Quality Client Information Standard is to ensure sufficient data is gathered for a planner to give reasonable advice.
The Providing Quality Recommendations Standard sets a minimum requirement for research to be performed on a product so that the client's needs are always the priority when giving product advice.
And the Providing Quality Advice Standard is to ensure the client's needs have been identified and properly serviced when preparing their financial plan.
At first glance the new standards may translate into a revamp of existing reporting regimes for financial planners and perhaps a more onerous arrangement.
For example, with the documentation of the terms of engagement principle under the Quality Client Engagement Standard, the FPA expects some planners to choose to satisfy this requirement through the financial services guide, and others to produce a separate terms of engagement document for this purpose.
The new standards will be officially introduced after July 2008, and compliance with them will be mandatory from July 2009 onwards.
Feedback about the standards is being sought now and FPA members have until May 2 of this year to respond.
