Advice industry faces insurance quandary

The whole concept of an industry funded compensation scheme is wrong - instead of addressing the cause of the problem, it creates a soft landing and nothing improves. Here's three valuable points for the Senator to consider instead of his band aid.

1) AFSL's are issued by ASIC after reviewing electronic applications and without meeting the applicant face to face. An interview process would throw up huge improvements in capability of assessment.

2) PI insurance which is mandatory is issued by the underwiter via a broker and again the insurer never meets the applicant. So we have planners that ASIC have never met, the insurer has never met and a broker who got paid commission. Sound sensible when something goes wrong?

3) AFSL's are not granted to RM applicants that don't provide advice or do not have retail advice experience. This means applicants with experience in corporate governance, risk management, investment management and underwriting get excluded ....but a planner with 3 years learning and selling life insurance qualifies as a responsible Manager. For example Peter Kell should not qualify to get an AFSL,neither would the MD of a Trustee or Custodian business - sensible policy .....or not?

By addressing some of these massive shortcomings we can improve the quality and depth of the RM world in line with directorships and the corporations act. that will protect consumers more than an artificially funded scheme.