A Queensland-based financial adviser has urged the parliamentary committee responsible for the review of the first tranche of the federal government's draft advice reforms to consider the actions of accountants and real estate agents as having the potential to provide poor advice.
Consilium Advisers senior financial planner Bernie O'Connor used his submission to the Parliamentary Joint Committee (PJC) on Corporations and Financial Services review of the Future of Financial Advice (FOFA) draft reforms to remind the committee the sole culprits of poor financial advice had not always been traditional financial planners.
"Many accountants give financial advice on a daily basis as do many real estate agents (REA) when selling investment properties," O'Connor said.
"There has been just as many, if not more, examples of not just poor advice by REA, but also downright fraud. While infrequent, advice that has financial consequences given by both accountants and even lawyers has been poor."
He said despite accountants and REAs providing financial advice, there appeared to be no issue with REAs receiving commission payments.
In addressing remuneration changes under the FOFA draft, he said the payment of commissions was not the key issue, but rather the level of commission some products had attached to them.
"For example, there is no product that can justify a 10 per cent commission, but ASIC has approved many PDSs (product disclosure statements) that clearly state these levels and higher," he said.
"Indeed, questions should be asked at levels of anything greater than [2] per cent. The real estate industry bodies have recommended commission levels that are generally used by agents. So why can't there be industry recommended maximum commission levels for financial products and for ASIC to closely monitor and challenge products that offer higher levels?"
The concept of opt-in "smells like the application of a 'nanny state", he said.
In any financial planning relationship there should be a well-defined engagement process that "spells out" the services to be provided and the amount and means of paying for those services, whether by commission or fees, he said.
He said while he did support the move to a more professional and accountable advice industry, he hoped "some commonsense" was included in the debate.
"This is poor legislation driven by a government that has been influenced by the union-dominated industry super funds," he said.
"Why aren't we holding ASIC to account for its many failures? If my industry is being targeted, why not other industries?"
Last month, the Senate called on the PJC to review the FOFA drafts.
