The Productivity Commission released its damning Competition in the Australian Financial System report last week, which broadly assessed the marketplace of financial products in Australia as a “blizzard of barely differentiated products.”
To alleviate product confusion and boost competition, the Productivity Commission floated allowing advisers operating under an AFSL to offer personal advice on home loans, in direct competition with mortgage brokers. This would require ASIC to consider a new-look AFSL which does not require a separate Australian Credit Licence (ACL) to be obtained.
“[This] would both expand sources of competition in home loan distribution and provide more holistic personal financial advice services to consumers,” the report said.
As it stands, advisers cannot advise on credit products, they can only provide general credit advice. Where advisers do provide specific advice on credit products, they must also hold an ACL.
Less than 10 per cent of AFSL holders and authorised representatives provide both financial and credit advice.
However, a likely hurdle to the feasibility of this model is the current conduct standards in financial advice, which are unfolding at the Royal Commission.
Advisers authorised by the major banks have been under fire in particular, as clients reveal poor financial advice left them emotionally and financially devastated.