I really need you to read this. No, I'm not selling anything.
But a really important part of our financial system is at risk, and I need you to know what's going on.
They say if you want to announce something that's unpopular, or you don't want scrutinised, you should do it late on a Friday.
Or just ahead of Christmas.
Which feels pretty much like… today.
Now, I make no allegations on timing, but I do know that an inquiry into financial advice, initiated by the former Federal government, will deliver its final report to the new Financial Services Minister, Stephen Jones, today.
And while that report's contents are unknown, we do know what the draft report included, when it was released earlier this year.
And the clanger?
The draft proposal recommended doing away with an obligation to provide advice that's in the client's best interest.
Yes, you read that right.
Instead, the draft report recommended that it merely be 'good advice' instead.
Now, I'm all for 'good advice'.
But let me ask you: How 'good' can that advice be if it's not in a client's best interest?
And, if the 'good' advice actually is in the client's best interest, why change the standard?
I think we all know the answers to those questions.
An advisor wouldn't need to make sure advice was right for you, or your circumstances, and could instead rely on some amorphous definition of 'good', instead.
Imagine a lawyer who didn't have to act in your best interest.
Imagine a doctor whose treatment needed to be merely 'good', but not in your 'best interest'.
It is, clearly, a nonsense.
Now, I'm the first to agree that the current 'best interests duty' is horribly bureaucratic.
It's almost as if the rules were designed by a government department!
But there is too much 'binary' stuff in public life already.
If the 'best interests duty' is causing undue cost and red tape, don't throw it out altogether… just change the cost and red tape!
You don't throw out your car if the air-con stops working. You get it fixed.
You don't give up on investing because you have one dud investment. You replace it with something else.
And so it should be with changes to — rather than a repeal of — the best interests duty.
But here's the bottom line: If the report recommends – and the government implements – the repeal of the bests interests duty for financial advice, we should all have a very simple question:
Whose interest is that 'good advice' really in?
Which isn't to say the very good advisers will suddenly turn bad.
But, as a consumer, how will you know?
How could you know?
There are too many horror stories, before and during the recent Royal Commission, of bad advice.
I've certainly heard my share, directly from people who've been dudded by dodgy financial advisors.
That's precisely why the best interests duty exists!
It is incomprehensible to me that any serious report – or any serious government – could countenance an advice industry that didn't, at the very bloody least, require its members to act in the best interests of their clients.
And, frankly, it beggars belief that the good people in that industry wouldn't want their profession to be held up to the same ethical standard as other professions.
They should want the best interests duty.
They should be proud of the best interests duty.
And they should want the dodgy advisors run out of Dodge.
But here we are.
If this change goes through, we'll be less protected, as consumers.
And we know what that has meant in the past.
So…
It's time for the good planners to stand up.
It's time for the industry to hold itself to a higher standard.
It's time for the pollies to take a stand on behalf of consumers across the country.
And it's time for the rest of us to hold our collective feet to the fire.
The 'best interests duty' must stay.
Now, maybe the final report will recommend exactly that.
But if it doesn't, our elected representatives must ensure that it does.
Over to you, Minister Jones, Treasurer Chalmers and Prime Minister Albanese.
Don't let us down.
(And if they do… you'll hear from me again, and I'll ask you to join me in campaigning for its retention. But let's hope it doesn't come to that!).
Fool on!
