Finance Minister Mathias Cormann has joined a chorus of criticism of the Financial Services Council’s (FSC) proposed adviser standards board, labelling its plan a “cop-out”.

“I don’t expect anyone to put up the white flag when it comes to providing leadership in the industry themselves [on] lifting professional, ethical and educational standards,” he said.

“I expect the FSC to join others such as the Financial Planning Association, the Association of Financial Advisers [and] the SMSF Professionals’ Association of Australia… in providing leadership to the financial services industry on lifting professional, ethical and educational standards.”

Senator Cormann says the FSC plan would add a layer of bureaucracy to current regulatory arrangements, and he is surprised at the proposal.

“To say that somehow the FSC doesn’t have the capacity to provide leadership in this space itself as well, I think, is a cop-out,” he said.

FSC CEO John Brogden has called for an advice competency standards board to oversee the financial advice sector.

He has pushed this in submissions to the Financial System Inquiry and the parliamentary inquiry into adviser educations standards.

The proposal was largely ignored until last week, when Mr Brogden declared self-regulation dead.

“Self-regulation is no longer a credible option for establishing higher standards,” he said.   

“The advice industry needs an external, independent governing body. The best way to regain trust is to have an independent statutory body in control of education and professional standards.”

The Financial Planning Association was quick to respond, with CEO Mark Rantall dismissing the FSC proposal as a “band-aid solution that masks underlying systemic issues. We don’t need a new board to oversee the Australian financial advice industry. What we do need is long-term, effective change that is transparent.”

Mr Rantall says all the FSC plan would do is create more red tape for advisers, while stopping “much-needed internal reform”.

“We believe the role of government and regulators is to set minimums standards and enforce them legally,” he said. “It is not to do the industry’s job by defining what professionalism in advice looks like.”

Industry Super Australia (ISA) Chairman Peter Collins says the FSC proposal is “window-dressing”.

“The proposed standards board for financial advisers is a distraction by the banks and an embarrassing backflip,” he said.

“Following an extraordinary lobbying campaign by the banks and financial advisers, the Future of Financial Advice bill currently before the Parliament gives the banks and advisers their wishlist at the expense of consumers.

“The banks now recognise they went too far and have lost the support of the Australian public.”

The FSC proposal has opened up divisions between the product manufacturers – which it represents – and adviser associations on how the advice industry should be regulated.

Meanwhile, industry super funds will exploit such divisions to attack banks and financial advisers on the issue of consumer trust.