That makes three!

Yet another of Australia’s largest financial institutions (that makes three) has become embroiled in a scandal that further undermines the financial services industry – the latest household name to fall from grace, National Australia Bank (NAB).  Never before have Australians needed trusted advice more, yet the industry continues to trip over itself in the quest for professionalism.

The question now on the agenda is do we need a Royal Commission into Financial Planning?

At FinSec Partners we welcome the call. The reforms that have gone before seem to have treated the symptoms and not the cause. Whatever form an inquiry takes it must address vertically integrated structures, advisor recruitment practices, education standards, remuneration arrangements and client compensation decisions.

With interest groups such as the big banks, the Industry Funds and consumer groups all driving different agendas, the government and regulators seem at a loss as to how to solve the problem. Attempts to date have failed to assist clients’ understanding of the key issues that ultimately lead to their purchasing decisions, in fact they have added layers of cost and complexity.

The latest proposal, an Advisor Register, may be a good step but only if the industry cooperates fully and ensures the integrity and usefulness of the information in the register for the people it is designed to assist, consumers of advice.

The solutions to the current malaise are complex and polarising but must be delivered in a way that does not continue to drive up the price of advice in the name of consumer protection. Advice should be accessible to all and the regulators must ensure that this remains the case given our chronic under insurance issues and a pool of superannuation money which has reached a magnitude that demands professional guidance.

Courage and leadership are required now to tackle this issue. If that means a Royal Commission, then so be it!