A single cross-industry regulator is needed to address the “hidden agendas, conflicted interests and ineffectual financial literacy standards” plaguing the financial system, Chan & Naylor said.
David Hasib, the firm’s wealth planning partner, argued for the establishment of a single regulatory authority to oversee the financial planning, accounting and insurance industries – with a common standard for corporate governance and education.
Both the financial planning and accounting industries have "missed the boat", with the former closely scrutinised and penalised over recent years, and the latter simply failing to "step up to the plate", according to Chan & Naylor.
"Whilst the financial services industry has been too forward-looking, the accounting industry has been too backwards-looking," said Mr Hasib.
"Meanwhile, the insurance sector has been allowed to morph itself into the financial advice profession as the Australian financial system itself has been blind-sided by hidden agendas, conflicted interests and ineffectual financial literacy standards," he said.
According to Mr Hasib, until these "discrepancies" are resolved, it is consumers who will "bear the brunt" of the industry shortfall.
“Put simply, the financial sector has dropped its duty of care to Australian consumers," he said.
Mr Hasib said the Financial System Inquiry represents an opportunity to restore the fiduciary client relationship.
"Australia requires a cross-industry level playing field ruled by a common standard of corporate governance, education (both for industry and consumer) and ultimately one regulatory authority overseeing the collective investment industry," he said.
ASIC should be at the forefront in upholding a "widely recognised code of conduct that provides clear and consistent compliance guidelines for all areas of investment and related advice," said Chan & Naylor.
If this is not achieved, financial services risks becoming "an even more disjointed environment, allowing the unscrupulous to fly under the radar and prey on vulnerable consumers", Mr Hasib said.