As Australia debates the validity of remunerating financial
planners via product commissions, Noel Maye US Financial
Planning Standards Board (FPSB) chief executive says
banning the commissions is not a satisfactory solution to
the problem of inadequate advice.
The comments were made at a recent press briefing at the
Financial Planning Association Congress in Sydney and coincide with recent discussions that Australia, the United States, the UK and Singapore debate the validity of remunerating financial
planners via product commissions.
The global financial planning industry leader said that, “a ban on commissions is often a
knee-jerk reaction from regulators, which doesn’t solve underlying problems in the financial
advice market. “I think banning commissions is a proxy conversation for misselling, loss of trust and other issues that have all got wrapped up in this discussion by the regulators,” Mayne said.
The FPSB (an FPA member) will seek to use its position as a member of the International
Organisation of Securities Commissions (IOSCO) to influence government responses to the
financial planning sector. Maye confirmed that regulators are increasingly aware of the role of
industry bodies in raising professional standards and are willing to negotiate and commented that, “regulators are coming to the realisation that you cannot legislate ethical behavior – you can make laws – but it’s actually the professional bodies that drive interest in ethical standards.”