Wednesday, 9 July 2008 
 
 
The Institute of Chartered Accountants in Australia (the Institute) is delighted that the federal government will target conflicts of interest in commissioned based financial advice as part of a superannuation industry overhaul aimed at reducing the fees and charges placed on financial products. 
 
The Institute has long advocated the need to reinvent the financial planning industry as there has been a fundamental structural problem with the industry, namely that some remuneration models rely upon the sale of products, supporting commission based structures.  
 
Senator the Hon Nick Sherry’s proposals to assess the alternatives to commission-based remuneration for financial advisers, will better serve the public interest. The Institute believes that it is through the adoption of fee-for-service remuneration models, many more Australians will have access to affordable financial advice. 
 
“The pleasing aspect to come out of the announcement is the acknowledgement by the federal government for the need for a structural renovation of the financial services industry. The Institute will be working closely with its members and forwarding to government proposals on long term sustainable solutions to reducing fees and charges,” said Mr Hugh Elvy, Institute of Chartered Accountants in Australia, Manager of Financial Planning and Superannuation. 
 
In initiatives last year the Institute produced leadership papers and hosted an industry forum that looked at the financial planning industry.  
 
“The Institute believes that the adoption of genuine, non-product-based fee-for-service remuneration models will lead to a relationship of greater trust between financial advisers and their clients. This greater trust may result in lower levels of intrusive, prescriptive legislation, and advice delivered at a lower cost.”  
 
“The way forward to ensure a sustainable long-term future for financial planners is for the industry to collectively recognise the need to remove remuneration models, which are based on the sale of products, and replace them with genuine fee-for-service arrangements,” said Elvy.  
 
Last year through its leadership papers the Institute proposed that it is industry’s responsibility to take up the mantle for reinvention and shape the future direction of the sector.  
 
“The Institute supports the Minister for Superannuation and Corporate Law in calling for industry and consumer groups to provide workable solutions, to effectively minimise the need to legislative intervention. It is important that voluntary reform is embraced for the future benefit of the industry itself and the community it serves.” Elvy concluded.