Why I oppose the rollback of Financial Planning reforms

Why I oppose the rollback of Financial Planning reforms .

In a recent article in the Sydney Morning Herald entitled,
"Rollback on finance sector regulations a danger to savings:
 Industry Super Australia", it goes on to say ,
'The government's looming changes to the financial services sector
 could spark a wave of financial collapses similar to those between 2006 and 2010
 that wiped out $6 Billion in savings of more than 120,000 investors,
 Industry Super Australia claims.
 ISA, which represents 5 million Australians
 with industry superannuation savings,
 is opposed to the government's plans to roll
 back Future of Financial Advice reforms
 introduced under Labor.'

In my discussions with some Financial Planners who are not monitored by Accountants,
I find a common theme of the neglect of the conflict of interest ethical issue.
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This represents the  opposing viewpoints of  offering the correct financial advice,
and the ongoing enticement of high commissions on certain investment products.
I have found  in my discussion of ethics with some financial planners,
that it is acknowledged that suspect investment products may get promoted if the Fofa reforms are revoked, and this is an area of major concern for ethical financial advisers.
However, some Financial Planners seem to be more interested in spending  time on the Golf Course,
than in resolving the conflict of interest issue.
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The article continues, "The government says it is rolling back the reforms to cut red tape and costs for consumers. It wants to water down requirements for financial planners to act in the best interests of clients, and scrap rules that would force financial planners to tell clients regularly how much they are paying in annual fees."

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The problem with the idea of cutting the red tape is that it was created by the Fofa reforms to help prevent financial advisers from promoted products based on commission incentives.

So in other words, the Financial Planner may  now in certain circumstances if the Fofa reforms are revoked, have less requirement to act in the best interests of the client, because the Investment product commissions

may become the primary concern of the Adviser.

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The article goes on, "In a briefing paper the ISA warns that allowing financial planners to take commissions for selling bulk policies, and re-allowing other forms of conflicting remuneration, could pave the way for another financial collapse.."

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The reintroduction of conflicting commissions can create a culture of greed amongst financial planners, where Investment products that offer the most Commission may get inundated with funds. 

This  can in certain circumstances create a mini-bubble effect which may lead to the Investment product collapsing .

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What do you think ?

Should financial planners be primarily commission based,

or should they be Fee based in a similar way to Accountants ?

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Rollback of Finance Sector Regulations

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Disclaimer - This article does not in any way constitute financial advice. Before making any financial decisions you should always consult with your professionally qualified Accountant or appropriately qualified professional Adviser .