Australia introduces reforms in financial sector
The Australian government on Monday unveiled several measures aimed at restructuring the countries financial services sector to provide more protection to small-time investors and avoid the lingering conflicts of interests among their consultants.
Key aspect of the reform is the ban on commissions and payments to consultants computed on their level of sales. The series of medications will be implemented in several dates, although most will be set for implementation starting July 1, 2012.
Financial Services Minister Chris Bowen said the government moved to introduce the restructuring of the sector after a 2009 parliamentary inquiry into the financial services found several high-profile corporate collapses.
In a statement, Bowen said, "These reforms will see Australian investors receive financial advice that is in their best interests, rather than being directed to products as a result of incentives or commissions offered to the financial adviser."
A major item in the planned revisions of the financial structure is a ban on "conflicted remuneration structures including commissions and volume-based payments" and a statutory requirement for advisers to act in their clients' best interests.
The powers of corporate watchdog Australian Securities and Investments Commission (ASIC) will also be extended to allow it to take actions against fraudulent operators. ASIC will also be allowed to introduce a compensation scheme to encourage more whistleblowers.
According to Bowen, the streamlining of the financial service is very important especially for Australia's aging population, which should also translate to quality financial advice. He disclosed that the government wants to raise the availability of simple, cost-effective and affordable financial advice for those who need it.