An external governance committee has been formed in response to the Royal Commission to ensure transparency in the financial services sector.
The industry-led initiative will oversee a new rating system on financial advice licensees to help consumers make informed decisions.
According to Australia’s only independent rating service of financial advisers, Adviser Ratings, the establishment of the external ratings committee (ERC) was a result of the findings of the Royal Commission.
Adviser Ratings founder and Managing Director Angus Woods said, “The Royal Commission has made it abundantly clear that the operation and supervision of the financial advice licensee ecosystem lacks transparency, and financial incentives embedded in the system have influenced behaviours not in consumers’ best interests,” he said.
“This is a watershed moment for substantive industry reform. For a sector already servicing over 2.4m Australians worth $1.5T and seeking to help more consumers towards improved financial well-being, the stakes have never been higher.”
Chaired by Professor of Finance and former Head of Banking and Finance at UNSW Business School, Jerry Parwada, the ERC will ensure the rating system is managed according to a credible governance regime.
Professor Parwada said the ERC was a significant milestone in the development of this new service.
“The quality of individuals that have agreed to serve on the ERC is testimony to the importance of this initiative and their commitment to building the industry into a respected profession,” he said.
“The Royal Commission advocates for increased information disclosure however the challenge for consumers is processing this deluge of information. This necessitates a carefully thought out and regularly updated summary measure of quality.
“A key differentiator of the proposed rating methodology is that it will be backed up by a standing research capability designed to stress test the factors predicted to influence quality of advice as well as keep track of changing dynamics in the industry.”
An expert panel has been appointed to support the ERC and comprises:
- Dr Deen Sanders OAM, Partner Governance, Regulation and Conduct, Deloitte
- Tom Reddacliff, Director and CEO Encore Advisory Group
- Dr Michelle Cull, Director of Academic Program, Accounting & Financial Planning, School of Business, Western Sydney University
For more information, visit http://www.adviserratings.com.au