IFSA to upgrade conflicts policies

The Investment and Financial Services Association (IFSA) should have new conflicts of interest guidelines in place “within a few months”, according to the organisation’s chief executive, Richard Gilbert.

Gilbert denied IFSA and the Financial Planning Association (FPA) were working jointly on the conflicts of interests issue and he said IFSA’s new policies would differ from the principles released last November by the FPA. “We’re separate organisations and we have different obligations to our members,” Gilbert said. However, some IFSA members, particularly those with tied distribution networks are likely to be affected by the FPA conflicts of interest principles if they are implemented in the proposed form. Included in the four principles outlined last year by the FPA are the requirements that its members separate advice, administration and product fees and that there is no preferential remuneration between the AFS (Australian Financial Services) licensee and their representatives. With close to 80 per cent of financial planners estimated to be under some form of institutional control the FPA conflicts of interest rules could have a far-reaching effect on industry practices. The FPA said last year it would confer with IFSA and other industry bodies on how best to implement its proposed conflicts of interest principles. Gilbert said IFSA has had to deal with a number of more important issues thrown up by the Financial Services Reform Act and ensuing policy statements from the Australian Securities and Investment Commission but would tackle the conflicts of interest question “in the goodness of time”. Under the CLERP 9 legislation introduced in 2004 all AFS licences have a direct and specific obligation to have adequate arrangements to manage their conflicts of interest.