Lawyers who have acted for victims of bad financial advice have urged the Federal Government to fully implement proposed measures aimed at raising industry standards and providing better protections to consumers.
The Federal Government last night released its response to the Financial System Inquiry Report, known as the Murray Report, which included recommendations to raise the competency of financial advice providers.
Slater and Gordon commercial lawyer James Naughton said proposed legislation to ‘raise the professional, ethical and educational standards of financial advisers’ was a welcome move.
“The proposed legislation will require advisers hold a degree, pass an exam, undertake continuous professional development and subscribe to a code of ethics,” Mr Naughton said.
“Some people may be surprised that these professional standards are not yet in place in the financial advice industry, given that other professional advisers – for example, lawyers and accountants – are subject to strict educational and professional development controls.”
The Federal Government has also proposed that ASIC’s register of financial advisors be amended to identify whether advisers have met the proposed new standards.
“This should make it easier for consumers to identify whether a financial adviser is the subject of any bans, disqualifications or code breaches,” Mr Naughton said.
“There are also plans to restrict use of the term ‘financial adviser’ and ‘financial planner’ to those listed on the register.
“These are all positive steps. However, it will be necessary for the Government to make sure that the proposals are fully implemented in order to provide the maximum benefit to consumers.”
Mr Naughton said people who sought advice from a financial planner were right to expect that they would receive a certain level of care and expertise. Their affairs should be properly managed.
“While the overwhelming majority of planners provide professional and well considered advice to their clients, we have seen clients who have fallen through the cracks,” he said.
“The results of poor financial advice can be devastating, especially for people who have sought advice as they are approaching retirement."
"While bad advice can obviously lead to significant financial losses, a more insidious result can be that the lifestyle people envisaged for their retirement can be lost.
“If the recommendations in the Murray Report are fully implemented, some of the harm that can be caused by poor financial advice may be reduced in the future.”