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A financial planning industry association has “warmly welcomed” the Productivity Commission’s recommendation to broaden the provision of credit advice, but has stressed that planners “would not be playing the role of a mortgage broker”.
Speaking to The Adviser, the CEO of the Financial Planning Association (FPA), Dante De Gori, expressed support for the Productivity Commission’s recommendation to implement a new Australian Financial Services Licence (AFSL) that would provide financial planners with access to the credit space.
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In its final report, the PC contended that extending credit advice to financial planners would:
- provide greater choice, time saving and more holistic advice for consumers;
- drive business and service innovation; and
- reduce financial costs involved in applying for two separate licences (AFSL and ACL).
Mr De Gori claimed that the proposed reform would produce “a lot of benefits”.
“This particular [recommendation] that’s been announced [is] something that’s of interest to us, and we warmly welcome that recommendation,” Mr De Gori said.
“[It] wasn’t something we were specifically advocating for; however, it’s been broadly welcomed by our members, and one that we support for a few reasons.”
The FPA CEO went on to claim that the reform would remove barriers that prevent financial planners from providing clients with a complete service.
“Currently, a lot of financial planners have to apply for separate Australian Credit License (ACL), or become Australian credit representatives, in order to provide advice around credit and debt,” the CEO continued.
“That can sometimes be a barrier for some financial planners who don’t have that authorisation to make recommendations around a client’s debt situation,” he said.
Mr De Gori also echoed the PC’s concerns regarding licensing costs, adding that the proposed reform would help ease the financial burden currently faced by planners.
“A separate licence has a separate cost, so there are a lot of benefits to synergising the licensing regime and reducing costs as well,” the FPA CEO said.
“I think it would be a welcome benefit for financial planners, considering that in this environment that we’re in, there’s a lot of escalating costs and additional costs being added through the regulation of financial advice.”
Further, Mr De Gori stressed that financial planners would not be undermining the broker proposition if the PC’s recommendation is implemented.
“To be very clear, this change is not to be seen as financial planners playing the role of a mortgage broker,” the CEO noted.
“This could instead streamline the fact that in financial planning, a holistic financial planning perspective, you are analysing and reviewing a client’s financial circumstances, which includes areas of debt and credit.
“The [current] credit licensing regime makes it very difficult for financial planners to make recommendations around those particular areas if they’re not licensed with an ACL, or authorised via an ACL holder.
“Mortgage brokers will continue to do what they do, and financial planners will continue to do what they do. This just enables that advice that they give to be done in a more effective way.”
[Related: Extending credit advice to planners is ‘pro-competitive’: PC]
