Financial advice businesses must use the Royal Commission as an opportunity to reflect on whether they have an acceptable culture and right approach to risk management.
Speaking as part of a panel session at the Association of Financial Advisers' National Adviser Conference, AFA general manager of policy and professionalism Phil Anderson said it would be a big mistake if the advice industry were to ignore the findings of Commissioner Hayne's interim report.
"There's no question that we've seen bad practices. The interim report seems to emphasise this is not about introducing more law, it seems to be suggested by the Commissioner that it's more about simplifying laws to ensure people actually know what they need to do," he said.
Though, there are elements that require greater education and discussion, particularly the issue of adviser remuneration.
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Anderson said there is no question that there is misconduct occurring. However, a blanket solution for fee structures is not the answer.
"We will not be arguing for the removal of life insurance commissions ... The avoidance of conflicts in business is an unrealistic expectation," he said.
"If you charge an hourly-based fee - which it's clear many think is the only solution - that gives an incentive to over-service. A flat fee might incentivise you to do the opposite. Conflicts are also driven out of asset-based fees."
He also defended the charging of fees to deceased estates, saying: "The media thinks it's clearly wrong, but ignores the complexities that are at play. Pushing back on this issue is challenging right now, but the last thing we want is to have advisers turn those fees off and walk away in that family's time of need."
On the topic of fee for no service however, Anderson was much less forgiving.
"It's simply a failure to meet contractual obligations. ASIC has really called out licensees on this and there's no question that it's just not good enough," he said.
"You cannot justify the non-completion of services you've committed to."