Dealer group licensees must have strong frameworks behind constructing approved product lists (APLs) if fiduciary duty for financial planners becomes law, according to industry veterans.
"It's the licensee's responsibility to look at the market and have a framework for assessing what a good product looks like," Colonial First State advice business general manager Paul Barrett told delegates at the Financial Services Council's annual conference in Melbourne yesterday.
"I think APLs, whilst they are an artificial construct of licensees, they are not required by law, are a good risk management tool in a market where there are hundreds and thousands of products, so I think they will continue.
"And most importantly in a no-commission world products will be laid bare and only those products that offer value, service and appropriate choice will be seriously considered."
FPA chief executive Mark Rantall, who has sat on an APL committee for over 10 years, said that the lists would be increasingly important in the future.
"To talk about a model for a moment, I think having a separate approved products committee is absolutely critical," he said at the conference.
"And having some independence on that approved products committee is absolutely critical, particularly independence in terms of depth of knowledge and in terms of products and how they are constructed.
"The days of presenting 'black box' products with everything inside them being synthetic and synthesised such that no-one can understand them should be gone and I think everybody in this room has a responsibility to help that journey."
