MLC & NAB Wealth (MLC) has recommended that financial planners in Australia be required to operate as either "affiliated financial planners" or "independent financial planners".
Both terms would be designated definitions under the Corporations Act and be federally regulated by ASIC, MLC said in its submission to the Joint Parliamentary Inquiry into financial products and services.
"MLC recommends that Australian investors would be better protected in a regulatory regime that oversees two distinct models of advice businesses, each categorised to reflect their operating structure and providing a meaningful descriptor for investors," MLC said.
"These businesses should be licensed as either 'affiliated' advice business or 'independent' advice business."
MLC is the wealth management division of the National Australia Bank, the country's third-biggest bank by market value.
MLC also recommended the committee require the advice industry, through its representative organisations, to identify alternative distribution remuneration models which do not include volume-based criteria.
"MLC further recommends the newly-proposed models should be free of influences that unduly bias advice recommendations and all payments should be fully disclosed to the customer," MLC said.
"The industry should present alternative proposals to the government for its consideration by June 2010."
MLC recommended all financial advice fees, whether relating to the preparation of the initial financial plan or its ongoing management, should be tax deductible. Furthermore, no cap should be applied.
The firm also recommended that new financial planners be obliged to meet minimum requirements including the completion of an undergraduate degree, completion of the Advanced Diploma in Financial Services and at least 12 months of related industry experience.
"In an ever-changing marketplace, the regulatory framework cannot remain static and must account for developments, positive and negative, particularly in the areas of product design and distribution practices," MLC said.
"All of the recommendations and commentary contained in MLC's submission have a common objective which seeks to place the customer at the centre of the investment experience and have the industry move to a more transparent and sustainable operating model."
