Financial advisers beware; the federal government is about to embark on an overhaul of the financial advice sector, placing a new emphasis on consumer protection.
A recent spate of very public disasters involving the financial advice industry including the Storm and Westpoint have demonstrated that when it comes to financial advice, the best interests of the client can take a backseat to personal interest.
The National Institute of Accountants have welcomed the step, with CEO Andrew Conway predicting the overhaul will cause a “fundamental shift” in the industry. The new laws will introduce a statutory fiduciary duty for financial advisers, which impose a corporate responsibility to prevent advisers leading clients to investments that provide limited benefit. Under the new system, an adviser cannot provide a recommendation if there is no suitable financial product for the client’s needs. The reforms “remove an insidious aspect of the current system”, Conway says, and will increase consumer confidence in the financial advice sector.
