Quality of financial advice review–Draft Terms of Reference

Conflicted remuneration is the root cause of many of the problems uncovered by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission).
The Advice Review is a critical opportunity to end conflicted remuneration in financial advice and insurance for good. The Draft TOR states the Government is commissioning the Advice Review ‘consistent with recommendations of the Final Report of the Royal Commission’.
However, the Advice Review cannot be said to be meaningfully implementing these recommendations without considering Commissioner Hayne’s commentary on the conflicts between interest and duty in financial services. These findings, and the evidence at the Royal Commission of atrocious sales behaviour motivated by commissions and incentives appear to have been forgotten in the drafting of the TOR, which make no reference to these issues.
Further, Treasury’s landing page for the Advice Review makes no reference to ‘conflicted remuneration’ or even ‘insurance’.  A casual reader may not discern that the Advice Review purports to implement Commissioner Hayne’s recommendations to review conflicted remuneration in life and general insurance.
For the Advice Review to have any credibility in responding to the recommendations of the Royal Commission, the Draft TOR must be expanded.
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