The Finance Sector Union (FSU) has called for the “removal of all conflicts of interest” in the financial services industry.

“Financial providers should act in the best interests of their customers and clients,” it says in its submission to a parliamentary joint committee considering ways to improve industry standards. “Practices and structures that generate conflicts between the interests of financial providers and their customers should be eliminated.” 

The FSU calls for an amendment to the Corporations Act, to include a “fiduciary duty” requiring financial advisers to put clients’ interests above all others, including their own.

It says feedback from union members “is that customer needs are not always the key driver or consideration in all circumstances where financial planning is undertaken”.

“The committee recommends that the Corporations Act be amended to explicitly include a fiduciary duty for financial advisers operating under an Australian financial services licence, requiring them to place their clients’ interests ahead of their own,” it says.

Clients’ interests are compromised as financial services providers look to increase profit from non-traditional sources, the FSU says.

“The result has seen financial planning services become a vital and thriving income stream for many financial organisations, with the appearance of financial planning services rivalling lending as an income source for some organisations.

“This push for growth has put the pressure squarely back onto the shoulders on many finance sector workers to secure potential consumers for planning evaluations and product profiling, exercises that are far more target and income-driven than based in clients’ best interests.”